HomeMy WebLinkAboutFY 2010 Comprehensive Annual Financial Report
Table of Contents
Introductory Section
Letter of Transmittal……………………………………………………………………. 1
Organization Chart……………………………………………………………………… 9 List of Principal Officials……………………………………………………………….. 10
GFOA Certificate of Achievement……………………………………………………….. 11
Financial Section
Independent Auditors’ Report………………………………………………………….. 13
Management’s Discussion & Analysis…………………………………………………... 15
Basic Financial Statements: Statements of Net Assets………………………………………………………………. 23
Statements of Revenues, Expenses, and Changes in Net Assets………………………. 25 Statements of Cash Flows………………………………………………………………. 26 Notes to Financial Statements…………………………………………………………... 28
Required Supplementary Information: Schedule of Funding Progress for PERS………………………………………………... 55
Schedule of Funding Progress for DPHP……………………………………………...... 55 Statistical Section
Net Assets by Component……………………………………………………………… 58 Changes in Net Assets…………………………………………………………………... 59
Operating Revenues by Source…………………………………………………………. 60
Operating Expenses by Function……………………………………………………….. 61 Non-Operating Revenues by Source…………………………………………………… 62
Non-Operating Expenses by Function………………………………………………… 63
Assessed Valuation of Taxable Property Within the District………………………… 64 Water Purchases, Production, and Sales……………………………………………...… 65
Meter Sales by Type……………………………………………………………………. 66
Number of Customers by Service Type………………………………………………… 67 Property Tax Levies and Collections…………………………………………………… 68
Water and Sewer Fixed Rates ……….…………………………………………………. 69 Water and Sewer Variable Rates…….…………………………………………………. 70 Ten Largest Customers…………………………………………………………………. 71
Ratios of Outstanding Debt by Type……………………………………………………. 72 Pledged Revenue Coverage…………………………………………………………….. 73 Ratios of General Bonded Debt Outstanding…………………………………………… 74
Computation of Direct and Overlapping Bonded Debt……………………………..… 75 Principal Employers…………………………..………………………………………... 76 Demographic and Economic Statistics………………………………………………….. 77
Number of Employees by Function…………………………………………………….. 78 Active Meters by Size………………………………………………………………..… 79
Operating and Capital Indicators……………………………………………………….. 80
October 12, 2010
Honorable Board of Directors Otay Water District
I am pleased to present the Otay Water District’s (the “District”) Comprehensive Annual
Financial Report (CAFR) for the fiscal year ended June 30, 2010.
This report was prepared by the District’s Finance Department following guidelines set forth by the Government Accounting Standards Board (GASB) and generally accepted accounting
principles (GAAP). Responsibility for both the accuracy of the data presented and the
completeness and fairness of the presentation, including all disclosures, rests with District
management. We believe the data, as presented, is accurate in all material respects and that it is presented in a manner that provides a fair representation of the financial position and results of operation of the District. Included are all disclosures we believe necessary to enhance your
understanding of the financial condition of the District. GAAP requires that management
provide a narrative introduction, overview, and analysis, to accompany the basic financial
statements in the form of Management’s Discussion and Analysis (MD&A), which should be read in conjunction with this report. The District’s MD&A can be found immediately following
the Independent Auditors’ Report.
The District’s financial statements have been audited by Diehl, Evans & Company, LLP, a firm
of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the District for the fiscal year ended June 30, 2010, are free of material misstatement. The independent audit involved examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements; assessing the
accounting principles used and significant estimates made by management; and evaluating the
overall financial statement presentation. The independent auditor concluded, based upon the
audit, that there was reasonable basis for rendering an unqualified opinion that the District’s financial statements for the fiscal year ended June 30, 2010, are fairly presented in conformity
with GAAP. The Independent Auditors’ Report is presented as the first component of the
financial section of this report.
REPORTING ENTITY
The District is a publicly-owned water and sewer agency, authorized on January 27, 1956 as a
California special district by the State Legislature, with an entitlement to import water under the
provisions of the Municipal Water District Act of 1911. Its ordinances, policies, taxes, and rates
for service are set by five Directors, elected by voters in their respective divisions, to serve staggered four-year terms on its Governing Board. The District is a “revenue neutral” public
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agency, meaning that each end-user pays only their fair share of the District’s costs of water
acquisitions and the construction, operation and maintenance, betterment, and renewal and
replacement of the public water and sewer facilities.
The General Manager reports directly to the Board of Directors and, through two Assistant General Managers and the District management, oversees day-to-day operations. One Assistant
General Manager oversees the departments of Administrative Services, Finance, Information
Technology and Strategic Planning, while the other oversees the Water Operations and
Engineering departments. These and other lines of reporting are shown on the organization chart on page 9.
Over the last 54 years, the District has grown from a handful of customers and two employees to
become an organization operating a network with more than 893 miles of pipelines, 44
operational reservoirs, a reclaimed water facility, and one of the largest recycled water distribution networks in San Diego County. The character of the service area has also changed from predominantly dry-land farming and cattle ranching, to businesses, high-tech industries,
and large master-planned communities.
Today the District provides water service to nearly 47,932 potable and 683 recycled customers within approximately 125.5 square miles of southeastern
San Diego County. All of the potable water sold to
customers is purchased from the San Diego County
Water Authority (CWA). Much of this water is purchased from the region’s water importer, the Metropolitan Water District of Southern California
(MWD). The District also has entered into an
agreement with the CWA to have the neighboring
Helix Water District treat imported water, on behalf of the Otay Water District, at their Levy Water Treatment Plant. This action has brought regional
water treatment closer to our customers and helped
reduce dependence on water treatment facilities
located outside of San Diego County.
To deliver this locally treated water to customers,
the District is nearing completion on a 5.1 mile, 36-
inch diameter pipeline. Drinking water delivered by this new pipeline will be stored in two
recently constructed 10 million gallon reservoirs. In addition to bringing water treatment closer
to customers, this new source of water diversifies the District’s supply and improves reliability.
The District also owns and operates a wastewater collection and recycling system to provide
public sewer service to approximately 4,646 homes and businesses within portions of the
communities of La Mesa, Rancho San Diego, El Cajon, Jamul, and Spring Valley. Wastewater
collected is conveyed to the District’s Ralph W. Chapman Water Recycling Facility (RWCWRF), which is capable of reclaiming wastewater at a rate of 1.3 million gallons per day.
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Balanced Scorecard
The District also purchases up to 6 million gallons per day of recycled water from the City of
San Diego’s South Bay Reclamation Plant. Recycled water from these two sources is used to
irrigate golf courses, schools, public parks, roadway landscapes, and various other approved uses
in eastern Chula Vista. The use of recycled water reduces dependency on imported supplies and provides a local supply, thereby diversifying District resources.
MISSION, CURRENT ECONOMIC CONDITIONS, AND OUTLOOK
The mission of the District is to provide customers with the best quality water, wastewater, and recycled water service in a professional, effective, and efficient manner. As in past years, we again face several key challenges. These challenges include: an economy in recession and
continuing instability in the financial markets; ongoing home foreclosures; reduced rainfall
throughout the Southwest; water shortages brought about by legal action to reduce water
deliveries from the Sacramento – San Joaquin Bay Delta; and the higher cost of imported water. Given these uncertain times, the District must find the best solutions that balance the many expectations placed on it by its customers. Meeting our customers’ expectations requires
dedication, a commitment to continuous improvement, and the innovative use of technologies
and resources.
While overall growth in San Diego County has slowed over the last three years, population within the District’s service area continues to increase albeit at a much reduced rate. As of July
2010, it is estimated that the District served 206,000 residents. The San Diego Association of
Governments (SANDAG), the regional planning agency, has estimated the District’s growth will
continue for a decade or more. The District projects an ultimate customer population of 295,000 residents.
BUDGETING CONTROLS
The District views the budget as an essential tool for proper financial management. The budget is developed with input from the various departments of the organization and is adopted prior to the start of each fiscal year. It is designed and presented for the general needs of the District, its
staff, and customers. It is a comprehensive and balanced financial plan that features District
services, resources and their allocation, financial policies, and other useful information to allow
the users to gain a general understanding of the District’s financial status and future. Monthly
comparison reports of budget to actual are prepared and distributed along with variance explanations to all department heads, with top level information provided to the Board at the
monthly board meetings.
BUDGET SUMMARY
The District’s Fiscal Year 2010 budget is $105.4 million, with operating expenditures of $77.0
million and capital expenditures of $28.4 million. The District’s goal is to provide the most
effective and efficient service possible while maintaining affordability of the water supply for the
community.
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The Otay Water District’s operating expenditures consist of three major sectors: potable water,
recycled water, and sewer, totaling $76,993,900 for Fiscal Year 2011. Revenues from potable
and recycled water are projected to be $63,954,500, about $122,500 (0.2%) less than the Fiscal
Year 2010 budget. Water sales volumes are expected to decrease as a result of the slowing economy and expanded efforts to promote water conservation. Rate increases are therefore essential to offset the higher wholesale cost of water. Sewer revenues are projected to be
$2,270,500, about $25,700 more than Fiscal Year 2010, because of necessary rate increases. The
remaining revenue of $10.8 million comes from special fees and assessments and miscellaneous
income. Significant aspects of the Operating Budget are:
A balanced budget meeting the goals of the Strategic Plan.
An updated six-year Rate Model to ensure sound financial planning and reserve levels.
Ongoing water supply rate increases of 12.2% from MWD and 11.3% from CWA
because of the high cost of supply programs, higher energy costs, and operating costs.
Implemented rate increases in potable, recycled water, and sewer. This included pass-through rate increases from CWA, and the County of San Diego.
In response to the economic slowdown, the District has again reduced staffing levels
from 166 full time equivalent positions to 159. It has also cut operating expenditures by
$233,100 due to program funding changes and other discretionary spending cuts.
Of San Diego County’s 23 water agencies, Otay’s water rate is the seventh-lowest and
below the county-wide average.
Expanded residential, landscape, and commercial water conservation programs.
The 2010-11 Capital Improvement Program
(CIP) Budget consists of 82 projects and a
budget of $28.4 million. The budget emphasizes long-term planning for on-going programs while functioning within fiscal
constraints and population growth. This year’s
CIP budget decreased by $8.7 million
compared to last year’s projection, which is
due to the completion of the Jamacha Pipeline Project.
STRATEGIC PLAN
The primary way to achieve our objectives is to improve all aspects of our core business
processes. The main tool we use to accomplish this goal is the Strategic Business Plan. Our first
Strategic Plan was created in 2003 and it has been updated every three years since that time. The
District is now entering the third year of the 2009-2011 Strategic Plan. The goal of the plan is to
capitalize on the technology investments we have made and to utilize those technologies as we continue to improve productivity and efficiency.
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The Strategic Plan is focused on the District’s transformation from a growth-centric to a
maintenance-based organization. Where growth has been a significant focus in prior years,
today we have become equally focused in managing long-term maintenance and replacement of
our infrastructure. This change is illustrated by the Business Maturity
Curve (see illustration). During high growth
periods, efforts are focused on achieving the macro
targets of building and installing new infrastructure. As an organization matures, fewer resources are needed to support growth, but the effort to maintain
and improve infrastructure and assets increases. In
addition, as an organization matures it derives
income more from customer rates and less from developer fees. At this stage, increased maintenance and replacement costs place pressure on customer rates. To balance the customer’s interest in
minimizing rate increases while also maintaining an organization’s infrastructure investments
and a strong financial position, it must place greater emphasis on internal efficiency and the
development of technology assisted best practices. In effect, we must use our investments in technology to do more with the same or fewer resources.
The Future
The coming years will continue to pose challenges for those in California’s water community. While the State of California received a normal amount of rainfall this year, federal court orders continue to curtail water deliveries from Northern California due to environmental factors in the
Sacramento-San Joaquin Bay Delta, the source of 30% of our imported water. The political
stalemate in the State Capital has also made finding compromise or addressing the environmental
issues in the Bay Delta difficult. These factors combined are driving the higher cost of water statewide.
However, through foresight, investments in drought-proof recycled water, conservation, and a
water rate structure that rewards conservation, the Otay Water District has thus far avoided
having to require mandatory water conservation. The District has instead achieved its water
conservation goals using voluntary measures.
As you would expect, the planned water sales reductions have impacted revenues and will
continue to affect the District’s finances. With that in mind, our success as an organization is
vastly enhanced by the practices and policies put in place by the Board of Directors to ensure the
strength and stability of the District, even as we move forward into uncertain times.
We are fully confident that with these policies and practices, supported by dedicated and talented
staff, we will achieve continued success as an organization and thus assure the well-being of the
people we serve.
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ACCOUNTING SYSTEM
The Finance Department is responsible for providing financial services to the District, including
financial accounting, reporting, payroll, accounts payable, investment of funds, billing and collection of water and wastewater charges, taxes, and other revenues. The District’s books and records are maintained on an enterprise basis, matching revenues against the costs of providing
services. Revenues and expenses are recorded on the accrual basis in the period in which
revenue is earned and expenses are incurred.
INTERNAL CONTROLS
Otay Water District operates within a system of internal controls established and continually
reviewed by management. This provides reasonable assurance that assets are adequately
safeguarded and transactions are recorded correctly according to District policies and procedures. When establishing or reviewing controls, management must consider the cost of the control and the value of the benefit derived from its utilization. Management normally maintains and
implements all sensitive controls and those controls whose value adequately exceeds their cost.
Management believes the District’s internal controls, procedures, and policies adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. In addition, the District maintains controls to provide for compliance with all finance related
legal and contractual provisions. Management believes the activities reported within the
presented Comprehensive Annual Financial Report (CAFR) comply with these finance related
legal and contractual provisions, including bond covenants and fiduciary responsibilities. CASH MANAGEMENT
During the year, available funds are invested in eligible securities, as required by law, and in
accordance with the District’s own investment policy adopted by the Board of Directors. The investment objectives of the District, in order of priority, are: 1) to preserve the capital of the portfolio; 2) to maintain adequate liquidity to meet cash flow requirements; and 3) to obtain a
reasonable rate of return without compromising the first two objectives.
RISK MANAGEMENT
In 2003, the District became a member of the Special District Risk Management Authority
(SDRMA), a pool program which provides the District's coverage for property, auto, liability,
health benefits, and workers’ compensation claims. During Fiscal Year 2009-2010, the District
continued its proactive liability risk management role through careful monitoring of losses and
designing and implementing programs to minimize risks and losses. In addition, the District’s Safety Committee analyzes workers’ compensation issues by monitoring work conditions, and
organizing and implementing safety training programs to reduce employee exposure to hazards.
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PENSION PLANS
In addition to participating in Social Security, the District provides a defined benefit pension
plan for its employees through the California Public Employees’ Retirement System (CalPERS).
The District contributes a specified percentage of covered employees’ payroll, which is invested by CalPERS. Upon retirement, District employees are entitled to a specified retirement benefit.
The plan is more fully described in Note 7 to the Financial Statements.
OTHER POST-EMPLOYMENT BENEFITS (OPEB)
The District provides other post-employment benefits (OPEB) as a part of the total compensation
offered to attract and retain the services of qualified employees. OPEB includes healthcare and
other forms of benefits (for example life insurance), in addition to the benefits provided from specific pension plans. During Fiscal Year 2007-2008 the District elected to set up an OPEB trust fund with CalPERS and pre-funded $5.6 million of its net OPEB obligations. With
additional contributions made since then, the fund balance now stands at $6.8 million. This is
more than two-thirds of the actuarial accrued liability (AAL) of $10.1 million as of June 30,
2009, the most recent actuarial valuation date. For additional information see Note 8 to the Financial Statements.
AWARDS AND ACKNOWLEDGMENTS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Otay Water District for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June
30, 2009. This was the sixth consecutive year that the District has achieved this prestigious
award. In order to be awarded a Certificate of Achievement, a government agency must publish
an easily readable and efficiently organized Comprehensive Annual Financial Report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
Comprehensive Annual Financial Report continues to meet the Certificate of Achievement
Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.
The District also received a Distinguished Budget Presentation Award from the GFOA for the
District’s Operating and Capital Budget for Fiscal Year beginning July 1, 2009, as well as two
awards from the California Society of Municipal Finance Officers (CSMFO) for Excellence in
Operating Budgeting and Excellence in Capital Budgeting. These prestigious awards recognize
conformance with the highest standards for preparation of state and local government financial
reports.
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The Construction Management Association of America (CMAA)
presented Otay Water District the 2010 Project Achievement
Award for the 1296-3 Reservoir Project (public works projects less
than $2.5 million). In addition, the Otay Water District and Infrastructure Engineering Corporation received the American Public Works Association (APWA) 2010 Project of the Year
Award for the 640-1 and 640-2 Reservoirs.
The Otay Water District was presented with the 2010 Public
Agency Partnership Award from the Engineering and General Contractors Association, San Diego.
I would like to thank all of the staff involved for their efforts in preparing this Comprehensive
Annual Financial Report, and for their hard work to ensure a successful outcome. I would also like to thank the firm of Diehl, Evans & Company, LLC, for their professional work and opinion. To the Board of Directors, staff and I acknowledge and appreciate their continued support and
direction in achieving excellence in financial management.
___________________________
Mark Watton, General Manager
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GENERAL MANAGER
BOARD OF DIRECTORS
Assistant General Manager
Engineering
Planning
Design
Water
Resources
Public Services
Construction
Survey
Environmental
Water
Operations
Water System
Operations
Utility
Maintenance/
Construction
Collection/
Treatment/
Recycle
Operations
Assistant General Manager
Information
Technology and
Strategic Planning
IT Applications
IT Operations
GIS
Finance
Controller
and
Budgetary
Services
Treasury
and
Accounting
Services
Customer
Service
Payroll and
Accounts
Payable
Administrative
Services
Human Resources
Purchasing and
Facilities
Safety and Risk
Administration
Water
Conservation
Organization Chart
Citizens and
Customers
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List of Principal Officials
Fiscal Year 2009-2010
Board of Directors
District Financial Management
Mark Watton - General Manager
German Alvarez - Assistant General Manager, Finance and Administration
Manny Magaña - Assistant General Manager, Engineering and Operations
Joseph R. Beachem - Chief Financial Officer
President Jaime Bonilla
Division 2
Vice-President Jose Lopez
Division 4
Treasurer
Gary D. Croucher
Division 3
Larry Breitfelder
Division 1
January 2003-July 2010
Mark Robak
Division 5
David Gonzales, Jr.
Division 1
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Award
11
OTHER OFFICES AT: 613 W. VALLEY PARKWAY, SUITE 330 5 CORPORATE PARK, SUITE 100
ESCONDIDO, CALIFORNIA 92025-2598 IRVINE, CALIFORNIA 92606-5165
(760) 741-3141 • FAX (760) 741-9890 (949)-399-0600 • FAX (949) 399-0610
A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS
2965 ROOSEVELT STREET
CARLSBAD, CALIFORNIA 92008-2389
(760) 729-2343 • FAX (760) 729-2234
www.diehlevans.com
October 12, 2010
INDEPENDENT AUDITORS' REPORT
Board of Directors
Otay Water District
Spring Valley, California
We have audited the accompanying basic financial statements of Otay Water District as of and for the years
ended June 30, 2010 and 2009, as listed in the table of contents. These basic financial statements are the
responsibility of the Otay Water District’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinions.
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the
financial position of the Otay Water District as of June 30, 2010 and 2009, and the changes in financial position
and cash flows for the years then ended in conformity with accounting principles generally accepted in the
United States of America.
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis, PERS Defined Benefit Pension Plan – schedule of funding progress, and Other Post-
Employment Benefit Plan – schedule of funding progress, as identified in the accompanying table of contents be
presented to supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management’s responses to our inquiries, the basic financial statements, and
other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or
provide any assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
*PHILIP H. HOLTKAMP, CPA
*THOMAS M. PERLOWSKI, CPA
*HARVEY J. SCHROEDER, CPA
KENNETH R. AMES, CPA
WILLIAM C. PENTZ, CPA
MICHAEL R. LUDIN, CPA
CRAIG W. SPRAKER, CPA
NITIN P. PATEL, CPA
ROBERT J. CALLANAN, CPA
*A PROFESSIONAL CORPORATION
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Our audit was conducted for the purpose of forming an opinion on the accompanying basic financial statements
of the Otay Water District. The Introductory Section and the Statistical Section, as identified in the
accompanying table of contents, are presented for purposes of additional analysis and are not a required part of
the financial statements. The Introductory Section and the Statistical Section have not been subjected to the
auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an
opinion or provide any assurance on them.
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As management of the Otay Water District (the “District”), we offer readers of the District’s financial statements this
narrative overview and analysis of the District’s financial performance during the fiscal year ending June 30, 2010. Please
read it in conjunction with the District’s financial statements that follow Management’s Discussion and Analysis. All
amounts, unless otherwise indicated, are expressed in millions of dollars.
Financial Highlights
The assets of the District exceeded its liabilities at the close of the most recent fiscal year by $463.2 million
(net assets). Of this amount, $80.2 million (unrestricted net assets) may be used to meet the District’s ongoing
obligations to citizens and creditors.
The District’s total net assets increased by $2.9 million. This is primarily attributable to the increase in capital
contributions of $9.1 million during the fiscal year.
Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the District’s basic financial statements, which are
comprised of the following: 1) Statement of Net Assets, 2) Statement of Revenues, Expenses and Changes in Net Assets,
3) Statement of Cash Flows, and 4) Notes to the Financial Statements. This report also contains other supplementary
information in addition to the basic financial statements.
The Statement of Net Assets presents information on all of the District’s assets and liabilities, with the difference between
the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether
the financial position of the District is improving or weakening.
The Statement of Revenues, Expenses and Changes in Net Assets presents information showing how the District’s net
assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event
giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported
in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and
earned but unused vacation leave).
The Statement of Cash Flows presents information on cash receipts and payments for the fiscal year.
The Notes to the Financial Statements provide additional information that is essential to a full understanding of the data
supplied in each of the specific financial statements listed above.
In addition to the basic financial statements and accompanying notes, this report also presents certain required
supplementary information concerning the District’s progress in funding its obligation to provide pension benefits to its
employees.
Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of an entity’s financial position. In the case of the
District, assets exceeded liabilities by $463.2 million at the close of the most recent fiscal year.
By far the largest portion of the District’s net assets, $377.8 million (82%), reflects its investment in capital assets, less any
remaining outstanding debt used to acquire those assets. The District uses these capital assets to provide services to
citizens; consequently, these assets are not available for future spending. Although the District’s investment in its capital
assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from
other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
Management’s Discussion and Analysis
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Statements of Net Assets
(In Millions of Dollars)
2010 2009 2008
Assets
Current and Other Assets $ 135.3 $ 96.8 $ 106.2
Capital Assets 471.1 454.1 446.7
Total Assets 606.4 550.9 552.9
Liabilities
Long-Term Debt Outstanding 117.7 69.1 71.6
Other Liabilities 25.5 21.5 24.5
Total Liabilities 143.2 90.6 96.1
Net Assets
Invested in Capital Assets
Net of Related Debt 377.8 382.4 372.7
Restricted for Debt Service 5.2 1.8 3.8
Unrestricted 80.2 76.1 80.3
Total Net Assets $ 463.2 $ 460.3 $ 456.8
At the end of FY-2010 the District is able to report positive balances in all categories of net assets. This situation also held
true for the prior two fiscal years. In FY-2010 total Net Assets increased approximately $2.9 million, to $463.2 million, as
compared to FY-2009 when Net Assets increased by over $3.5 million. While the District’s operations and population
continue to grow, albeit at slower rates than in prior years, the pattern of reduced growth of the District’s Net Assets is
indicative of the reduction in new development projects within the District. This reduction is a result of the ongoing national
housing slump and financial crisis.
In FY-2009 the decrease in Current and Other Assets of $9.4 million corresponds with the increase in Capital Assets of $7.4
million (net of accumulated depreciation), due primarily to the District’s Capital Improvement Plan (CIP), which was
financed in part by the funds remaining from the FY-2007 issuance of $42 million in Certificates of Participation (COPS-
2007).
In FY-2010 the District issued $51.2 million of new Water Revenue Bonds, contributing to the increase in Current and Other
Assets of $38.5 million, and the increase in Long-Term Debt Outstanding of $48.6 million. (See Note 5 in the Notes to
Financial Statements). The use of the 2010 Water Revenue Bonds is also reflected in the increase in Capital Assets of $17.0
million, as the District continued its CIP program. (See Note 3 in the Notes to Financial Statements).
Management’s Discussion and Analysis
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Statements of Revenues, Expenses, and Changes in Net Assets
(In Millions of Dollars)
2010 2009 2008
Water Sales $ 56.3 $ 52.4 $ 50.8 Wastewater Revenue 2.3 2.2 2.4 Connection and Other Fees 1.9 2.5 2.5 Non-operating Revenues 8.7 14.0 13.6
Total Revenues 69.2 71.1 69.3
Depreciation Expense 13.3 12.5 13.0
Other Operating Expense 59.3 59.0 58.5
Non-operating Expense 2.8 3.1 2.9
Total Expenses 75.4 74.6 74.4
Loss Before Capital
Contributions (6.2) (3.5) (5.1)
Capital Contributions 9.1 7.0 14.9
Change in Net Assets 2.9 3.5 9.8
Beginning Net Assets 460.3 456.8 447.0
Ending Net Assets $ 463.2 $ 460.3 $ 456.8
Water Sales increased by $1.6 million in FY-2009 and $3.9 million in FY-2010, mainly due to reduced rainfall during FY-2009 as well as rate increases in both years. The slowdown in growth throughout the District was also reflected in the
decrease in Connection and Other Fees of $0.6 million in FY-2010.
Non-operating Revenues increased by $0.4 million in FY-2009 due primarily to increased property tax revenues. However in FY-2010, Non-operating Revenues decreased by $5.3 million due to a combination of factors. First, there was a decrease in
investment income due to a continuing drop in rates on investment securities. Also, in FY-2009 the District received a large, one-time legal settlement as a member of a class action lawsuit against a major supply vendor. Finally, in the prior year the
District brought in capacity fee revenue to offset the write-off of a capital asset project that was deemed no longer economically viable for continued operations.
Capital Contributions were $14.9 million in FY-2008 due to the completion of several developer construction projects.
However, because of the nationwide housing mortgage crisis throughout the last several years, developers have either slowed-down or totally stopped work on many projects until economic conditions improve and the demand for growth
returns. This has resulted in a decrease in Capital Contributions of $7.9 million in FY-2009. By FY-2010 this slowdown appears to have stabilized, while the District received $2.4 million more than expected in federal grant monies due to last
minute availability of funds from the federal budget.
Management’s Discussion and Analysis
17
Management’s Discussion and Analysis
Capital Assets and Debt Administration
Capital Assets. The District’s capital assets as of June 30, 2010, totaled $471.1 million (net of accumulated depreciation).
Included in this amount is land. The total increase in the District’s capital assets was 1.7% for FY-2009 and 3.7% in
FY-2010.
Capital Assets
(In Millions of Dollars)
2010 2009 2008
Land $ 13.6 $ 13.4 $ 13.0
Construction in Progress 37.1 18.3 42.3
Water System 409.5 403.1 365.6
Recycled Water System 97.7 96.8 93.0
Sewer System 37.4 37.2 36.7
Field Equipment 18.5 18.2 17.6
Buildings 9.5 9.5 9.5
Transportation Equipment 3.3 3.3 3.1
Communication Equipment 1.3 0.8 0.7
Office Equipment 18.4 17.4 16.8
646.3 618.0 598.3
Less Accumulated
Depreciation (175.2) (163.9) (151.6)
Net Capital Assets $ 471.1 $ 454.1 $ 446.7
As indicated by figures in the table above, the majority of capital assets added during both fiscal years were related to the
potable and recycled water systems. In addition, the majority of the cost of construction in progress is also related to these water systems.
Additional information on the District’s capital assets can be found in Note 3 of the Notes to Financial Statements.
Long-Term Debt. At June 30, 2010, the District had $117.7 million in outstanding debt which consisted of the following:
General Obligation Bonds $ 6.8 Certificates of Participation 59.7
Revenue Bonds 51.2 Total Long-Term Debt $ 117.7
Additional information on the District’s long-term debt can be found in Note 5 of the Notes to Financial Statements.
18
Management’s Discussion and Analysis
Fiscal Year 2010-2011 Budget
Economic Factors
Growth in the San Diego area has slowed over the last 3 years, and demand for housing is reflected in a similarly reduced
pace. Water sales volumes have gradually decreased as a result of a combination of the slowing economy and expanded
efforts to promote water conservation. After years of record low precipitation that dramatically curtailed snow runoff from
the Sierra Nevada Mountains, California’s governor declared an official statewide drought in June 2008. Following the
governor’s action, all local jurisdictions were urged to implement water conservation ordinances and to “significantly
increase efforts” to conserve water. In addition to the drought, federal court orders have curtailed water deliveries from
Northern California due to environmental factors in the Sacramento-San Joaquin Bay Delta. A greater focus on
environmental conditions in the Bay Delta brings added challenges to the delivery of water through the State Water
Project. In order to maintain the ongoing supply of water to Southern California the various and competing interests need
to arrive at genuine solutions. The combination of these factors will add to the cost of providing water. At the same time,
ongoing water supply rate increases from the Metropolitan Water District (MWD) and the San Diego County Water
Authority (CWA) have required the District to implement rate increases to pass-through these costs, as well as increases in
energy costs and operating costs.
The District currently provides water service to about 70% of its total projected population, serving approximately 206,000
people. Long-term, this percentage should continue to increase as the District's service area continues to develop and
grow. Ultimately, the District is projected to serve approximately 295,000 people, with an average daily demand of 55
million gallons per day (MGD). Currently, the District services the needs of this growing population by purchasing water
from CWA, who in turn purchases its water from MWD and the Imperial Irrigation District (IID). Otay takes delivery of
the water through several connections of large diameter pipelines owned and operated by CWA. The District currently
receives treated water from CWA, and the Helix Water District (HWD) by contract with CWA. In addition, the District
has an emergency agreement with the City of San Diego in the case of a shutdown of the main treated water source.
Through innovative agreements like this, benefits can be achieved by both parties by using excess capacity of another
agency, and diversifying local supply, thereby increasing reliability.
Financial
The District is projected to deliver approximately 29,900 acre-feet of potable water to 48,060 potable customer accounts
during Fiscal Year 2010-2011. Management feels that these projections are very realistic after accounting for low growth,
supply changes, and a focus on conservation. Current economic conditions throughout America have created an
unprecedented uncertainty for business and economic projections in the current fiscal year. The nationwide housing
mortgage crisis has resulted in hundreds of foreclosures throughout the District. Additionally, the crisis in the banking and
financial industry has begun to have a ripple effect of employee layoffs across a wide swath of the business community.
One of the subsequent results of these two broad events is the relocation of many homeowners and renters into new
housing arrangements throughout San Diego County. Even with the housing pattern changes throughout the District,
people’s need for water remains an underlying constant. Staff continues working diligently on developing new water
supplies as it addresses the financial impacts of conservation, preparing for the possibility of a continued water shortage
and prolonged sales reductions.
Management is unaware of any other conditions that could have a significant impact on the District’s current financial
position, net assets or operating results.
Contacting the District’s Financial Management
This financial report is designed to provide a general overview of the Otay Water District’s finances for the Board of
Directors, taxpayers, creditors, and other interested parties. Questions concerning any of the information provided in the
report or requests for additional information should be addressed to the District’s Finance Department, 2554 Sweetwater
Springs Blvd., Spring Valley, CA 91978-2004.
19
2010 2009
ASSETSCurrent Assets:
Cash and Cash Equivalents (Notes 1 and 2)40,180,519$ 50,823,237$
Restricted Cash and Cash Equivalents (Notes 1 and 2)21,131,924 1,760,631
Investments (Note 2)43,085,300 26,169,080
Restricted investments (Notes 1 and 2)11,150,549 -
Accounts Receivable, net 8,959,367 8,029,609
Accrued Interest Receivable 239,355 319,186
Taxes and Availability Charges Receivable, net 366,535 413,000 Restricted Taxes and Availability Charges Receivable, net 186,813 190,151
Inventories 954,007 816,865
Prepaid Expenses and Other Current Assets 626,421 976,045
Total Current Assets 126,880,790 89,497,804
Non-current Assets:
Net OPEB Asset (Note 8)6,783,385 6,204,876
Deferred bond issuance costs (Note 4)1,703,282 1,142,762
Capital Assets (Note 3):
Land 13,620,963 13,402,840 Construction in progress 37,081,849 18,280,278
Capital assets, net of depreciation 420,363,833 422,369,157
Total Capital Assets, net of depreciation 471,066,645 454,052,275
Total Non-current Assets 479,553,312 461,399,913
Total Assets 606,434,102 550,897,717
Statement of Net Assets
June 30, 2010 and 2009
See accompanying independent auditors' report and notes to financial statements.
23
2010 2009
LIABILITIES
Current Liabilities:
Current Maturities of Long-Term Debt (Note 5)2,668,734 2,521,772 Accounts Payable 15,327,365 11,565,953
Accrued Payroll Liabilities 2,743,408 2,548,731
Other Accrued Liabilities 638,015 444,875
Customer Deposits 2,146,360 2,806,990
Accrued Interest 1,154,286 706,934
Liabilities Payable From Restricted Assets:
Restricted Accrued Interest 100,326 153,270
Total Current Liabilities 24,778,494 20,748,525
Non-current Liabilities:Long-term Debt (Note 5)
General Obligation Bonds 6,763,127 7,291,575
Certificates of Participation 59,694,612 61,468,693
Revenue bonds 51,255,224 -
Notes Payable 6,010 359,744
Other Non-current Liabilities 684,309 684,309
Total Non-current Liabilities 118,403,282 69,804,321
Total Liabilities 143,181,776 90,552,846
NET ASSETS
Invested in Capital Assets, Net of Related Debt 377,855,787 382,410,491
Restricted for debt service 5,192,111 1,797,512
Unrestricted 80,204,428 76,136,868
Total Net Assets 463,252,326$ 460,344,871$
Statement of Net Assets
June 30, 2010 and 2009
See accompanying independent auditors' report and notes to financial statements.
24
2010 2009
OPERATING REVENUES
Water Sales 56,249,816$ 52,428,648$
Wastewater Revenue 2,299,585 2,182,429
Connection and Other Fees 1,907,797 2,492,234
Total Operating Revenues 60,457,198 57,103,311
OPERATING EXPENSES
Cost of Water Sales 39,338,495 37,252,482
Wastewater 2,169,988 1,890,804
Administrative and General 17,750,713 19,888,161
Depreciation 13,297,497 12,475,714
Total Operating Expenses 72,556,693 71,507,161
Operating Income (Loss)(12,099,495)(14,403,850)
NON-OPERATING REVENUES (EXPENSES)
Investment Income 1,323,844 2,252,335
Taxes and Assessments 3,973,328 4,586,823
Availability Charges 670,784 625,065
Gain on Sale of Capital Assets (143,086)5,206
Miscellaneous Revenues 2,921,016 6,569,644
Donations (100,240)(95,270)
Interest Expense (2,404,530)(1,340,110)
Miscellaneous Expenses (303,541)(1,671,597)
Total Non-operating Revenues (Expenses)5,937,575 10,932,096
Income (Loss) Before Contributions (6,161,920)(3,471,754)
Capital Contributions 9,069,375 6,989,208
Change in Net Assets 2,907,455 3,517,454
Total Net Assets, Beginning 460,344,871 456,827,417
Total Net Assets, Ending 463,252,326$ 460,344,871$
Statement of Revenues, Expenses and Changes in Net Assets
Years Ended June 30, 2010 and 2009
See accompanying independent auditors' report and notes to financial statements.
25
2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from Customers 56,959,013$ 54,358,847$
Receipts from Connections and Other Fees 1,907,797 2,492,234
Other Receipts 1,837,028 5,538,973
Payments to Suppliers (36,816,755)(43,072,805)
Payments to Employees (18,659,239)(18,947,144)
Other Payments (261,742)(1,640,481)
Net Cash Provided (Used) By Operating Activities 4,966,102 (1,270,376)
CASH FLOWS FROM NON-CAPITAL AND RELATED FINANCING ACTIVITIES
Receipts from Taxes and Assessments 4,023,131 4,520,867
Receipts from Property Rents and Leases 1,083,988 1,070,881
Net Cash Provided (Used) By Non-capital
and Related Financing Activities 5,107,119 5,591,748
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Proceeds from Capital Contributions 7,946,690 4,014,110
Proceeds from Sale of Capital Assets 94,118 5,206
Proceeds from Debt Related Taxes and Assessments 670,784 625,065
Net proceeds from issuance of Long-Term Debt 57,826,816 -
Retirement of Long-Term Debt (7,231,011)
Principal Payments on Long-Term Debt (2,521,772) (2,445,214)
Interest Payments and Fees (2,477,159) (1,366,547)
Acquisition and Construction of Capital Assets (28,990,017) (16,838,494)
Net Cash Provided (Used) By Capital and
Related Financing Activities 25,318,450 (16,005,874)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest Received on Investments 1,336,944 2,494,196
Proceeds from Sale and Maturities of Investments 53,997,000 70,703,937
Purchase of Investments (81,997,040) (36,035,657)
Net Cash Provided (Used) by Investing Activities (26,663,096) 37,162,476
Net Increase (Decrease) in
Cash and Cash Equivalents 8,728,575 25,477,974
Cash and Cash Equivalents -Beginning 52,583,868 27,105,894
Cash and Cash Equivalents -Ending 61,312,443$ 52,583,868$
Statement of Cash Flows
Years Ended June 30, 2010 and 2009
See accompanying independent auditors' report and notes to financial statements.
26
2010 2009
Reconciliation of operating income (loss) to net cash
provided (used) by operating activities:
Net Operating Income (Loss)(12,099,495)$ (14,403,850)$
Adjustments to Reconcile Operating Income
to Net Cash Provided (Used) by Operating Activities:
Depreciation 13,297,497 12,475,714
Miscellaneous Revenues 1,837,028 5,538,973
Miscellaneous Expenses (261,742) (1,640,481)
(Increase) Decrease in Accounts Receivable (929,758) (339,889)
(Increase) Decrease in Inventory (137,142) (105,625)
(Increase) Decrease in Net OPEB Asset (578,509) (555,868)
(Increase) Decrease in Prepaid Expenses and Other Current Assets 349,624 931,983
Increase (Decrease) in Accounts Payable 3,761,412 (2,139,613)
Increase (Decrease) in Accrued Payroll and Related Expenses 194,677 57,549
Increase (Decrease) in Other Accrued Liabilities 193,140 (1,170,528)
Increase (Decrease) in Customer Deposits (660,630) 87,659
Increase (Decrease) in Prepaid Capacity Fees - (6,400)
Net Cash Provided (Used) By Operating Activities 4,966,102$ (1,270,376)$
Schedule of Cash and Cash Equivalents:
Current Assets:
Cash and Cash Equivalents 40,180,519$ 50,823,237$
Restricted Cash and Cash Equivalents 21,131,924 1,760,631
Total Cash Provided (Used) By Operating Activities 61,312,443$ 52,583,868$
Supplemental Disclosures
Non-cash Investing and Financing Activities Consisted of the Following:
Contributed Capital for Water and Sewer System 1,122,685$ 2,975,098$
Change in Fair Value of Investments and Recognized Gains/Losses 230,747 21,613
Amortization Related to Long-Term Debt 142,039 126,387
Statement of Cash Flows
Years Ended June 30, 2010 and 2009
See accompanying independent auditors' report and notes to financial statements.
27
NOTE DESCRIPTION PAGE
1 Reporting Entity and Summary of Significant Accounting Policies..… 29
2 Cash and Investments…………………………………………..……... 32
3 Capital Assets…………………………………………………..……... 37
4 Other Non-Current Assets…………………………………………….. 38
5 Long-Term Debt………………………………………………….…… 39
6 Net Assets…………………………………………………………….. 43
7 Defined Benefit Pension Plan…………………………………………. 43
8 Other Post-Employment Benefits………………………..…………..... 45
9 Water Conservation Authority………………………………………... 47
10 Commitments and Contingencies…………………………………….. 48
11 Risk Management…………………………………………………….. 48
12 Interest Expense……………………………………………………..... 49
13 Segment Information……………………………………………….…. 50
Required Supplementary Information:
1 Schedule of Funding Progress for PERS……………………………… 55
2 Schedule of Funding Progress for DPHP……………………………... 55
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
28
See independent auditors’ report.
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) Reporting Entity
Otay Water District (the “District”) is a public entity established in 1956 pursuant to the Municipal Water District Law of
1911 (Section 711 et. Seq. of the California Water Code) for the purpose of providing water and sewer services to the
properties in the District. The District is governed by a Board of Directors consisting of five directors elected by
geographical divisions based on District population for a four-year alternating term.
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation
The basic financial statements of the Otay Water District have been prepared in conformity with accounting principles
generally accepted in the United States of America. The Governmental Accounting Standards Board (GASB) is the
accepted standard setting body for governmental accounting financial reporting purposes.
The District reports its activities as an enterprise fund, which is used to account for operations that are financed and
operated in a manner similar to a private business enterprise, where the intent of the District is that the costs (including
depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered
primarily through user charges. Revenues and expenses are recognized on the accrual basis. Revenues are recognized
in the accounting period in which they are earned and expenses are recognized in the period incurred, regardless of
when the related cash flow takes place.
Net assets of the District are classified into three components: (1) invested in capital assets, net of related debt, (2)
restricted net assets, and (3) unrestricted net assets. These classifications are defined as follows:
Invested in Capital Assets, Net of Related Debt
This component of net assets consists of capital assets, net of accumulated depreciation and reduced by the outstanding
balances of notes or borrowing that are attributable to the acquisition of the asset, construction, or improvement of
those assets. If there are significant unspent related debt proceeds at year-end, the portion of the debt attributable to
the unspent proceeds are not included in the calculation of invested in capital assets, net of related debt.
Restricted Net Assets
This component of net assets consists of constraints placed on net asset use through external constraints imposed by
creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or
constraints imposed by law through constitutional provisions or enabling legislation.
Unrestricted Net Assets
This component of net asset consists of net assets that do not meet the definition of “invested in capital assets, net of
related debt” or “restricted net assets.”
The District distinguishes operating revenues and expenses from those revenues and expenses that are non-operating.
Operating revenues are those revenues that are generated by water sales and wastewater services while operating expenses
pertain directly to the furnishing of those services. Non-operating revenues and expenses are those revenues and expenses
generated that are not directly associated with the normal business of supplying water and wastewater treatment services.
The District recognizes revenues from water sales, wastewater revenues, and meter fees as they are earned. Taxes and
assessments are recognized as revenues based upon amounts reported to the District by the County of San Diego, net of
allowance for delinquencies of $61,483 and $67,017 at June 30, 2010 and 2009, respectively.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
29
See independent auditors’ report.
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
B) Measurement Focus, Basis of Accounting and Financial Statement Presentation - Continued
Additionally, capacity fee contributions received which are related to specific operating expenses are offset against those expenses and included in Cost of Water Sales in the Statement of Revenues and Expenses and Changes in Net Assets.
When both restricted and unrestricted resources are available for use, it is the District’s policy to use restricted resources
first, then unrestricted resources as they are needed.
The District has elected under GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds
and Other Governmental Activities That Use Proprietary Fund Accounting, to apply all GASB pronouncements as
well as any applicable pronouncements of the Financial Accounting Standards Board (FASB), the Accounting Principles Board (APB), or any Accounting Research Bulletins (ARB) issued on or before November 30, 1989,
unless they contradict or conflict with GASB pronouncements.
C) Statement of Cash Flows
For purposes of the Statement of Cash Flows, the District considers all highly liquid investments (including
restricted assets) with a maturity period at purchase of three months or less to be cash equivalents.
D) Investments
The District’s investments are stated at fair value except for short-term investments that are reported at cost, which approximates fair value. Investments in governmental investment pools are reported on the fair value per share of
the pool’s underlying portfolio.
E) Inventory and Prepaids
Inventory consists primarily of materials used in the construction and maintenance of the water and sewer system and is
valued at weighted average cost. Both inventory and prepaids use the consumption method whereby they are reported
as an asset and expensed as they are consumed.
F) Capital Assets
Capital assets are recorded at cost, where historical records are available, and at an estimated historical cost where no
historical records exist. Infrastructure assets in excess of $20,000 and other capital assets in excess of $10,000 are
capitalized if they have an expected useful life of two years or more. The District will also capitalize individual
purchases under the capitalization threshold if they are part of a new capital program. The cost of purchased and self-
constructed additions to utility plant and major replacements of property are capitalized. Costs include materials, direct
labor, transportation, and such indirect items as engineering, supervision, employee fringe benefits, and interest incurred
during the construction period. Repairs, maintenance, and minor replacements of property are charged to expense. Donated assets are capitalized at their approximate fair market value on the date contributed.
The District capitalizes interest on construction projects up to the point in time that the project is substantially
completed. Capitalized interest is included in the cost of water system assets and is depreciated on the straight-line basis
over the estimated useful lives of such assets.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
30
See independent auditors’ report.
1) REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
F) Capital Assets - Continued
Depreciation is calculated using the straight-line method over the following estimated useful lives:
Water System 15-70 Years
Field Equipment 2-50 Years
Buildings 30-50 Years
Communication Equipment 2-10 Years Transportation Equipment 2-4 Years
Office Equipment 2-10 Years
Recycled Water System 50-75 Years
Sewer System 25-50 Years
G) Compensated Absences
In accordance with GASB Statement No. 16, a liability is recorded for unused vacation and sick leave balances since
the employees’ entitlement to these balances are attributable to services already rendered and it is probable that virtually
all of these balances will be liquidated by either paid time-off or payment upon termination or retirement.
H) Restricted Assets and Liabilities
Certain current liabilities have been classified as current liabilities payable from restricted assets as they will be
funded from restricted assets.
I) Allowance for Doubtful Accounts
The District charges doubtful accounts arising from water sales receivable to bad debt expense when it is probable that
the accounts will be uncollectible. Uncollectible accounts are determined by the allowance method based upon prior
experience and management’s assessment of the collectability of existing specific accounts. The allowance for doubtful
accounts was $12,937 and $17,531 for 2010 and 2009, respectively.
J) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
K) Property Taxes
Tax levies are limited to 1% of full market value (at time of purchase) which results in a tax rate of $1.00 per $100
assessed valuation, under the provisions of Proposition 13. Tax rates for voter-approved indebtedness are excluded
from this limitation.
The County of San Diego (the “County”) bills and collects property taxes on behalf of the District. The County’s tax
calendar year is July 1 to June 30. Property taxes attach as a lien on property on January 1. Taxes are levied on July 1
and are payable in two equal installments on November 1 and February 1, and become delinquent after December 10
and April 10, respectively.
L) Reclassifications
Certain reclassifications have been made to prior year amounts to conform to the current year presentation.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
31
See independent auditors’ report.
2) CASH AND INVESTMENTS
The primary goals of the District’s Investment Policy are to assure compliance with all Federal, State, and Local laws
governing the investment of funds under the control of the organization, protect the principal of investments entrusted, and
generate income under the parameters of such policies.
Cash and Investments are classified in the accompanying financial statements as follows:
Statement of Net Assets:
Current Assets 2010 2009
Cash and Cash Equivalents $ 40,180,519 $ 50,823,237
Restricted Cash and Cash Equivalents 21,131,924 1,760,631
Investments 43,085,300 26,169,080
Restricted Investments 11,150,549 -
Total Cash and Investments $ 115,548,292 $ 78,752,948
Cash and Investments consist of the following:
2010 2009
Cash on hand $ 2,800 $ 2,800
Deposits with Financial Institutions 4,158,859 5,701,125
Investments 111,386,633 73,049,023
Total Cash and Investments $ 115,548,292 $ 78,752,948
Investments Authorized by the California Government Code and the District’s Investment Policy
The table below identifies the investment types that are authorized for the District by the California Government Code (or
the District’s Investment Policy, where more restrictive). The table also identifies certain provisions of the California
Government Code (or the District’s Investment Policy, where more restrictive) that address interest rate risk, credit risk,
and concentration of credit risk. This table does not address investments of debt proceeds held by the bond trustee that are
governed by the provisions of debt agreements of the District, rather than the general provisions of the California
Government Code or the District’s Investment Policy.
Maximum Maximum
Authorized Maximum Percentage Investment Investment Type Maturity Of Portfolio(1) In One Issuer
U.S. Treasury Obligations 5 years None None
U.S. Government Sponsored Entities 5 years None None
Certificates of Deposit 5 years 15% None
Corporate Medium-Term Notes 5 years 15% None
Commercial Paper 270 days 15% 10%
Money Market Mutual Funds N/A 15% None
County Pooled Investment Funds N/A None None
Local Agency Investment Fund (LAIF) N/A None None
(1) Excluding amounts held by the bond trustee that are not subject to California Government Code restrictions.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
32
See independent auditors’ report.
2) CASH AND INVESTMENTS – Continued
Investments Authorized by Debt Agreements
Investments of debt proceeds held by the bond trustee are governed by provisions of the debt agreements, rather than the
general provisions of the California Government Code or the District’s Investment Policy.
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment.
Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest
rates. One of the ways the District manages its exposure to interest rate risk is by purchasing a combination of shorter term
and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or
coming close to maturity evenly over time, as necessary, to provide the cash flow and liquidity needed for operations.
Information about the sensitivity of the fair values of the District’s investments to market interest rate fluctuations is
provided by the following tables that show the distribution of the District’s investments by maturity as of June 30, 2010 and
2009.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
12 Months 13 to 24 25 to 60 More Than
Investment Type Or Less Months Months 60 Months
U.S. Government Sponsored Entities $ 53,911,225 $ - $ 21,801,325 $ 32,109,900 $ -
Local Agency Investment Fund
(LAIF) 34,561,668 34,561,668 - - -
Corporate Medium-term Notes 4,062,740 4,062,740 - - -
San Diego County Pool 18,851,000 18,851,000 - - -
Total $ 111,386,633 $ 57,475,408 $ 21,801,325 $ 32,109,900 $ -
12 Months 13 to 24 25 to 60 More Than
Investment Type Or Less Months Months 60 Months
U.S. Government Sponsored Entities $ 22,048,400 $ - $ 22,048,400 $ - $ -
Local Agency Investment Fund
(LAIF) 7,489,943 7,489,943 - - -
Corporate Medium-Term Notes 4,120,680 - 4,120,680 - -
San Diego County Pool 39,390,000 39,390,000 - - -
Total $ 73,049,023 $ 46,879,943 $ 26,169,080 $ - $ -
June 30, 2010
June 30, 2009
Remaining Maturity (in Months)
Remaining Maturity (in Months)
33
See independent auditors’ report.
2) CASH AND INVESTMENTS - Continued
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment.
This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the
minimum rating required (where applicable) by the California Government Code or the District’s Investment Policy, or debt
agreements, and the actual rating as of June 30, 2010 and 2009 for each investment type.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
Minimum
Legal Not
Investment Type Rating AAA AA Rated
U.S. Government Sponsored Entities $ 53,911,225 N/A $ 53,911,225 $ - $ -
Local Agency Investment
Fund (LAIF) 34,561,668 N/A - - 34,561,668
Corporate Medium-Term Notes 4,062,740 A 4,062,740 -
San Diego County Pool 18,851,000 N/A - - 18,851,000
Total $ 111,386,633 $ 53,911,225 $ 4,062,740 $ 53,412,668
Minimum
Legal Not
Investment Type Rating AAA AA Rated
U.S. Government Sponsored Entities $ 22,048,400 N/A $ 22,048,400 $ - $ -
Local Agency Investment
Fund (LAIF) 7,489,943 N/A - - 7,489,943
Corporate Medium-Term Notes 4,120,680 A 2,061,960 2,058,720 -
San Diego County Pool 39,390,000 N/A - - 39,390,000
Total $ 73,049,023 $ 24,110,360 $ 2,058,720 $ 46,879,943
Rating as of Year End
Rating as of Year End
June 30, 2010
June 30, 2009
34
See independent auditors’ report.
2) CASH AND INVESTMENTS - Continued
Concentration of Credit Risk
The investment policy of the District contains various limitations on the amounts that can be invested in any one type or group
of investments and in any issuer, beyond that stipulated by the California Government Code, Sections 53600 through 53692. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent
5% or more of total District investments as of June 30, 2010 and 2009 are as follows:
June 30, 2010
June 30, 2009
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government
will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside
party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-
dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in
the possession of another party. The California Government Code and the entity’s investment policy do not contain legal or
policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or
local government units by pledging securities in an undivided collateral pool held by a depository regulated under state law
(unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at
least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure
deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.
As of June 30, 2010, $819,689 of the District’s deposits with financial institutions in excess of federal depository insurance
limits was held in collateralized accounts. As of June 30, 2009, $2,454,830 of the District’s deposits with financial institutions
in excess of federal depository insurance limits was held in collateralized accounts.
Issuer Investment Type Reported Amount
Federal Home Loan Bank U.S. Government Sponsored Entities $ 20,044,400
Federal Home Loan Mortgage Corp
Federal National Mortgage Association
U.S. Government Sponsored Entities
U.S. Government Sponsored Entities
$ 11,791,825
$ 22,075,000
Issuer Investment Type Reported Amount
Federal Home Loan Bank U.S. Government Sponsored Entities $ 5,996,260
Federal Home Loan Mortgage Corp
Federal National Mortgage Association
U.S. Government Sponsored Entities
U.S. Government Sponsored Entities
$ 4,022,100
$ 10,033,780
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
35
See independent auditors’ report.
2) CASH AND INVESTMENTS - Continued
Local Agency Investment Fund (LAIF)
The District is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government
Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the District’s investment
in this pool is reported in the accompanying financial statements at amounts based upon District’s pro-rata share of the fair
value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost-basis.
San Diego County Pooled Fund
The San Diego County Pooled Investment Fund (SDCPIF) is a pooled investment fund program governed by the County of
San Diego Board of Supervisors, and administered by the County of San Diego Treasurer and Tax Collector. Investments in
SDCPIF are highly liquid deposits and withdrawals can be made at anytime without penalty.
The County of San Diego’s bank deposits are either Federally insured or collateralized in accordance with the California
Government Code. Pool detail is included in the County of San Diego Comprehensive Annual Financial Report (CAFR).
Copies of the CAFR may be obtained from the County of San Diego Auditor-Controller’s Office, 1600 Pacific Coast Highway, San Diego, CA 92101.
Collateral for Deposits
All cash and Certificates of Deposit are entirely insured or collateralized.
Under the provisions of the California Government Code, California banks and savings and loan associations are required to
secure the District's deposits by pledging government securities as collateral. The market value of the pledged securities must
equal at least 110% of the District's deposits. California law also allows financial institutions to secure District deposits by
pledging first trust deed mortgage notes having a value of 150% of the District's total deposits.
The District may waive the 110% collateral requirement for deposits which are insured up to $250,000 by the FDIC.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
36
See independent auditors’ report.
3) CAPITAL ASSETS
The following is a summary of changes in Capital Assets for the year ended June 30, 2010:
Beginning
Balance Additions Deletions Ending Balance
Capital Assets, Not Depreciated:
Land 13,402,840$ 280,065$ (61,942)$ 13,620,963$
Construction in Progress 18,280,278 28,300,354 (9,498,783) 37,081,849
Total Capital Assets Not Depreciated 31,683,118 28,580,419 (9,560,725) 50,702,812
Capital Assets, Being Depreciated:
Infrastructure 537,188,394 8,508,856 (1,163,265) 544,533,985
Field Equipment 9,473,571 422,577 (366,590) 9,529,558
Buildings 18,165,527 299,465 (13,860) 18,451,132
Transportation Equipment 3,284,639 325,228 (331,175) 3,278,692
Communication Equipment 787,358 548,462 - 1,335,820
Office Equipment 17,403,147 1,362,848 (335,607) 18,430,388
Total Capital Assets Being Depreciated 586,302,636 11,467,436 (2,210,497) 595,559,575
Less Accumulated Depreciation:
Infrastructure 135,582,472 11,462,706 (939,178) 146,106,000
Field Equipment 8,963,959 93,704 (372,084) 8,685,579
Buildings 6,090,921 446,906 (62,686) 6,475,141
Transportation Equipment 2,655,866 149,802 (327,814) 2,477,854
Communication Equipment 410,205 58,343 - 468,548
Office Equipment 10,230,056 1,086,036 (333,472) 10,982,620
Total Accumulated Depreciation 163,933,479 13,297,497 (2,035,234) 175,195,742
Total Capital Assets Being Depreciated, Net 422,369,157 (1,830,061) (175,263) 420,363,833
Total Capital Assets, Net 454,052,275$ 26,750,358$ (9,735,988)$ 471,066,645$
Depreciation expense for the years ended June 30, 2010 and 2009 was $13,297,497 and $12,475,714, respectively.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
37
See independent auditors’ report.
3) CAPITAL ASSETS
The following is a summary of changes in Capital Assets for the year ended June 30, 2009:
4) OTHER NON-CURRENT ASSETS
Deferred bond issue costs totaled $1,703,282 and $1,142,762, net of accumulated amortization of $295,204 and $296,308 as of June 30, 2010 and 2009, respectively. The costs are amortized on the straight-line method based on the estimated term of
the related bond debt. Amortization expense of $66,704 and $56,030 for the years ended June 30, 2010 and 2009 is included
in miscellaneous non-operating expenses.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
Beginning
Balance Additions Deletions Ending Balance
Capital Assets, Not Depreciated:
Land 13,025,364$ 377,476$ -$ 13,402,840$
Construction in Progress 42,338,220 19,496,000 (43,553,942) 18,280,278
Total Capital Assets Not Depreciated 55,363,584 19,873,476 (43,553,942) 31,683,118
Capital Assets, Being Depreciated:
Infrastructure 495,249,373 42,051,766 (112,745) 537,188,394
Field Equipment 9,430,276 43,295 - 9,473,571
Buildings 17,636,124 529,403 - 18,165,527
Transportation Equipment 3,102,661 194,636 (12,658) 3,284,639
Communication Equipment 689,954 97,404 - 787,358
Office Equipment 16,825,593 577,554 - 17,403,147
Total Capital Assets Being Depreciated 542,933,981 43,494,058 (125,403) 586,302,636
Less Accumulated Depreciation:
Infrastructure 125,132,713 10,562,504 (112,745) 135,582,472
Field Equipment 8,714,039 249,920 - 8,963,959
Buildings 5,637,685 453,236 - 6,090,921
Transportation Equipment 2,559,141 109,383 (12,658) 2,655,866
Communication Equipment 369,564 40,641 - 410,205
Office Equipment 9,170,026 1,060,030 - 10,230,056
Total Accumulated Depreciation 151,583,168 12,475,714 (125,403) 163,933,479
Total Capital Assets Being Depreciated, Net 391,350,813 31,018,344 - 422,369,157
Total Capital Assets, Net 446,714,397$ 50,891,820$ (43,553,942)$ 454,052,275$
38
See independent auditors’ report.
5) LONG-TERM DEBT
Long-Term liabilities for the year ended June 30, 2010 are as follows:
Beginning
Balance Additions Deletions
Ending
Balance
Due Within
One Year
General Obligation Bonds:
Improvement District No. 27 - 1998 $ 8,395,000 $ - $ 8,395,000 $ - $ -
Unamortized Bond Discount (96,159) - (96,159) - -
Deferred Amount on Refunding (572,266) - (572,266) - -
Improvement District No. 27 - 2009 - 7,780,000 - 7,780,000 520,000
Unamortized Bond Discount - 209,884 10,903 198,981 -
Deferred Amount on Refunding - (728,990) (33,136) (695,854) -
Net General Obligation Bonds 7,726,575 7,260,894 7,704,342 7,283,127 520,000
Certificates of Participation:
1996 Certificates of Participation 12,100,000 - 400,000 11,700,000 400,000
2004 Certificates of Participation 10,320,000 - 530,000 9,790,000 545,000
2007 Certificates of Participation 41,215,000 - 815,000 40,400,000 850,000
1996 COPS Unamortized Discount (13,413) - (745) (12,668) -
2007 COPS Unamortized Discount (250,219) - (9,044) (241,175) -
2004 COPS Unamortized Premium 16,500 - 1,165 15,335 -
2004 COPS Deferred Amount on
Refunding (174,175) - (12,295) (161,880) -
Net Certificates of Participation 63,213,693 - 1,724,081 61,489,612 1,795,000
Revenue Bonds:
2010 Water Revenue Bonds Series A - 13,840,000 - 13,840,000 -
2010 Water Revenue Bonds Series B - 36,355,000 - 36,355,000 -
2010 Series A Unamortized Premium - 1,078,824 18,600 1,060,224 -
Net Revenue Bonds - 51,273,824 18,600 51,255,224 -
Notes Payable:
State Water Resource Control Board 701,516 - 341,772 359,744 353,734
Total Long-Term Liabilities $ 71,641,784 $ 58,534,718 $ 9,788,795 $120,387,707 $2,668,734
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
39
See independent auditors’ report.
5) LONG-TERM DEBT – Continued
In June 1998, the District issued $11,835,000 of General Obligation Refunding Bonds. The proceeds of this issue, together
with other lawfully available monies, were to be used to establish an irrevocable escrow to advance refund and defease in
their entirety the District’s previous outstanding General Obligation Bond issue. In November 2009, The District issued
$7,780,000 of General Obligation Refunding Bonds to refund the 1998 issue. The proceeds from the bond issue were
$7,989,884, which included an original issue premium of $209,884. An amount of $7,824,647, which consisted of unpaid
principal and accrued interest, was deposited into an escrow fund. Pursuant to an optional redemption clause in the 1998
bonds, the District was able to redeem the 1998 bonds, without premium at any time after September 1, 2009. On
December 15, 2009 the 1998 were refunded.
General Obligation Bonds
The savings between the cash flow required to service the old debt and the cash flow required to service the new debt is
$1,099,110 and represents an economic gain on refunding of $640,925.
These bonds are general obligations of Improvement District No. 27 (ID 27) of the District. The Board of Directors has the
power and is obligated to levy annual ad valorem taxes without limitation, as to rate or amount for payment of the bonds
and the interest upon all property which is within ID 27 and subject to taxation. The General Obligation Bonds are payable
from District-wide tax revenues. The Board may utilize other sources for servicing the bond debt and interest.
The refunding of the 1998 bonds resulted in a deferred amount of $728,989 which is being amortized over the remaining
life of the refunded debt. Amortization for the year ended June 30, 2010 was $33,136 and is included in miscellaneous
non-operating expenses. As of June 30, 2010, the unamortized deferred amount of refunding is $695,853.
Future debt service requirements for the bonds are as follows:
The 2009 General Obligation Bonds have interest rates from 3.00% to 4.00% with maturities through Fiscal Year 2023.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
For the Year Ended
June 30 Principal Interest Total
2011 $ 520,000 $ 267,012 787,012$
2012 505,000 251,637 756,637
2013 520,000 236,262 756,262
2014 535,000 220,437 755,437
2015 550,000 204,162 754,162
2016-2020 3,045,000 724,468 3,769,468
2021-2023 2,105,000 127,903 2,232,903
$ 7,780,000 $ 2,031,881 $ 9,811,881
40
See independent auditors’ report.
5) LONG-TERM DEBT - Continued
Certificates of Participation (COPS)
In June 1996, Certificates of Participation (COPS) with a face value of $15,400,000 were sold by the Otay Service Corporation to finance the cost of design, acquisition, and construction of certain capital improvements. An installment purchase agreement
between the District, as Buyer, and the Corporation, as Seller, was executed for the scheduled payment of principal and interest
associated with the COPS. The installment payments are to be paid from taxes and “net revenues,” as described in the
installment agreement. The certificates bear interest at a variable weekly rate not to exceed 12%. The variable interest rate is
tied to the 30-day LIBOR index and the Securities Industry and Financial Markets Association (SIFMA) index. The interest
rate at June 30, 2010 was 0.25%. The installment payments are to be paid annually at $350,000 to $900,000 from September
1, 1996 through September 1, 2026.
In July 2004, Refunding Certificates of Participation with a face value of $12,270,000 were sold by the Otay Service Corporation to advance refund $11,680,000 of outstanding 1993 COPS. An installment purchase agreement between the
District, as Buyer, and the Corporation, as Seller, was executed for the scheduled payment of principal and interest associated
with the COPS. The installment payments are to be paid from taxes and “net revenues,” as described in the installment
agreement. The certificates are due in annual installments of $445,000 to $895,000 from September 1, 2005 through
September 1, 2023; bearing interest at 3% to 4.625%.
In March 2007, Revenue Certificates of Participation with a face value of $42,000,000 were sold by the Otay Service
Corporation to improve the District’s water storage system and distribution facilities. An installment purchase agreement
between the District, as Buyer, and the Corporation, as Seller, was executed for the scheduled payment of principal and interest
associated with the COPS. The installment payments are to be paid from taxes and “net revenues,” as described in the
installment agreement. The certificates are due in annual installments of $785,000 to $2,445,000 from September 1, 2007 through September 1, 2036; bearing interest at 3.7% to 4.47%.
There is no aggregate reserve requirement for the COPS. Future debt service requirements for the certificates are as follows:
* Variable Rate - Interest reflected at June 30, 2010 at a rate of 0.25%.
The three COPS debt issues contain various covenants and restrictions, principally that the District fix, prescribe, revise
and collect rates, fees and charges for the Water System which will be at least sufficient to yield, during each fiscal year,
taxes and net revenues equal to one hundred twenty-five percent (125%) of the debt service for such fiscal year. The
District was in compliance with these rate covenants for the fiscal year ended June 30, 2010.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
For the Year
Ended June 30 Principal Interest* Principal Interest Principal Interest
2011 $ 400,000 $ 28,417 $ 545,000 $ 386,236 $ 850,000 $ 1,655,395
2012 400,000 27,417 565,000 368,607 885,000 1,622,864
2013 500,000 26,208 580,000 349,566 920,000 1,589,020
2014 500,000 24,958 600,000 328,906 955,000 1,553,864
2015 500,000 23,708 625,000 306,388 995,000 1,517,301
2016-2020 3,200,000 95,583 3,505,000 1,133,050 5,580,000 6,979,134
2021-2025 4,100,000 49,708 3,370,000 314,597 6,785,000 5,762,360
2026-2030 2,100,000 3,626 - - 8,335,000 4,192,867
2031-2035 - - - - 12,650,000 2,208,438
2036-2038 - - - - 2,445,000 211,640
$ 11,700,000 $ 279,625 $ 9,790,000 $ 3,187,350 $ 40,400,000 $ 27,292,883
1996 COPS 2004 COPS 2007 COPS
41
See independent auditors’ report.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
5) LONG-TERM DEBT – Continued
Water Revenue Bonds
In April 2010, Water Revenue Bonds with a face value of $50,195,000 were sold by the Otay Water District Financing
Authority to provide funds for the construction of water storage and transmission facilities. The bond issue consisted of two
series; Water Revenue Bonds, Series 2010A (Non-AMT Tax Exempt) with a face value of $13,840,000 plus a $1,078,824
original issue premium, and Water Revenue Bonds Series 2010B (Taxable Build America Bonds) with a face value of
$36,255,000. The Series 2010A bonds are due in annual installments of $785,000 to $1,295,000 from September 1, 2011
through September 1, 2025; bearing interest at 2% to 5.25%. The Series 2010B bonds are due in annual installments of
$1,365,000 to $3,505,000 from September 1, 2026 through September 1, 2040; bearing interest at 6.377% to 6.577%.
Interest on both series is payable on September 1, 2010 and semi-annually thereafter on March 1st and September 1st of each
year until maturity or earlier redemption. The installment payments are to be made from Taxes and Net Revenues of the
Water System as described in the installment purchase agreement, on parity with the payments required to be made by the
District for the 1996, 2004 and 2007 Certificates of Participation described above.
The total amount outstanding at June 30, 2010 and aggregate maturities of the revenue bonds for the fiscal years subsequent
to June 30, 2010, are as follows:
The 2010 Water Revenue Bonds contain various covenants and restrictions, principally that the District fix, prescribe, revise
and collect rates, fees and charges for the Water System which will be at least sufficient to yield, during each fiscal year,
taxes and net revenues equal to one hundred twenty-five percent (125%) of the debt service for such fiscal year. The District
was in compliance with these rate covenants for the fiscal year ended June 30, 2010.
The proceeds of the bonds will be used to fund the project described above as well as to fund reserve funds of $1,030,688
(Series 2010A) and $2,707,418 (Series 2010B). A total of $542,666 was used to fund various costs of issuance.
The original issue premium is being amortized over the 14 year life of the Series 2010A bonds. At June 30, 2010, $18,600
has been amortized and is included in interest expense. The unamortized premium at June 30, 2010 is $1,060,224.
For the Year
Ended June 30 Principal Interest Principal Interest
2011 $ - $ 498,928 $ - $ 2,049,031
2012 785,000 569,688 - 2,371,868
2013 800,000 553,838 - 2,371,868
2014 820,000 533,538 - 2,371,868
2015 845,000 508,563 - 2,371,868
2016-2020 4,700,000 2,018,963 - 11,859,342
2021-2025 5,890,000 779,567 - 11,859,342
2026-2030 - - 7,745,000 10,685,177
2031-2035 - - 10,570,000 7,756,703
2036-2040 - - 14,535,000 3,664,211
2041 - - 3,505,000 115,262
$ 13,840,000 $ 5,463,085 $ 36,355,000 $ 57,476,540
2010 Water Revenue Bonds Series A 2010 Water Revenue Bonds Series B
42
See independent auditors’ report.
5) LONG-TERM DEBT - Continued
Note Payable
In December 1990, the District entered into a 3.5% note payable to the State Water Resources Control Board. This note is
unsecured and payable in annual installments of $366,325 including principal and interest from 1992 through 2012. The total amount outstanding at June 30, 2010 and aggregate maturities of the note for the fiscal years subsequent to June 30, 2010 are
as follows:
For the Year
Ended June 30 Principal Interest
2011 $ 353,734 $ 12,591
2012 6,010 1
$ 359,744 $ 12,592
6) NET ASSETS
Designated Net Assets
In addition to the restricted net assets, a portion of the unrestricted net assets have been designated by the Board of Directors for the following purposes as of June 30, 2010 and 2009:
2010 2009
Designated Betterment $ 6,653,909 $ 2,969,722
Designated Expansion Reserve 21,096,749 18,569,610
Replacement Reserve 24,483,877 26,388,812
Insurance Reserve 6,639,953 8,436,721
Total $ 58,874,488 $ 56,364,865
7) DEFINED BENEFIT PENSION PLAN
Plan Description
The District’s defined plan, (the “Plan”), provides retirement and disability benefits, annual cost-of-living adjustments, and
death benefits to plan members and beneficiaries. The Plan is part of the Public Agency portion of the California Public
Employees’ Retirement System (CalPERS), an agent multiple-employer plan administered by CalPERS, which acts as a
common investment and administrative agent for participating public employers within the State of California. A menu of
benefit provisions as well as other requirements is established by State statute within the Public Employees’ Retirement Law.
The Plan selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits
through District resolution. CalPERS issues a separate Comprehensive Annual Financial Report. Copies of the CalPERS’ annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, California 95814.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
43
See independent auditors’ report.
7) DEFINED BENEFIT PENSION PLAN - Continued
Funding Policy
Active members in the Plan are required to contribute 8% of their annual covered salary. The District has elected to contribute
7% on behalf of its employees. The District is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration. The required employer contribution rate for the fiscal year ended June 30, 2010 was 19.815%. The contribution requirements of the Plan members are established by State statute and the employer contribution rate is established
and may be amended by CalPERS.
Annual Pension Costs
For the fiscal year ended June 30, 2010, the District’s annual pension cost and actual contribution was $2,240,538. The required contribution for the fiscal year ended June 30, 2010 was determined as part of the June 30, 2007 actuarial valuation.
The following is a summary of the actuarial assumptions and methods:
Valuation Date June 30, 2007 Actuarial Cost Method Entry Age Actuarial Cost Method Amortization Method Level Percent of Payroll Average Remaining Period 20 Years as of the Valuation Date
Asset Valuation Method 15 Year Smoothed Market Actuarial Assumptions: Investment Rate of Return 7.75% (Net of Administrative Expenses)
Projected Salary Increase 3.25% to 14.45% Depending on Age, Service, and Type of Employment Inflation 3.00% Payroll Growth 3.25% Individual Salary Growth A merit scale varying by duration of employment coupled with an assumed annual
inflation component of 3.00% and an annual production growth of 0.25%.
Initial unfunded liabilities are amortized over a closed period that depends on the Plan’s date of entry into CalPERS.
Subsequent Plan amendments are amortized as a level percentage of pay over a closed 20-year period. Gains and losses that occur in the operation of the Plan are amortized over a rolling period, which results in an amortization of 6% of unamortized gains and losses each year. If the Plan’s accrued liability exceeds the actuarial value of the Plan assets, then the amortization payment of the total unfunded liability may be lower than the payment calculated over a 30-year amortization period.
THREE-YEAR TREND INFORMATION FOR PERS Fiscal Annual Pension Percentage of Net Pension Year Cost (APC) APC Contributed Obligation 6/30/10 $ 2,240,538 100% $ 0 6/30/09 $ 2,150,579 100% $ 0 6/30/08 $ 2,252,601 100% $ 0
Funded Status and Funding Progress
As of June 30, 2008, the most recent actuarial valuation date, the Plan was 75.8% funded. The actuarial accrued liability (AAL) for benefits was $65,542,736, and the actuarial value of assets was $49,712,016, resulting in an unfunded actuarial accrued liability (UAAL) of $15,830,720. The covered payroll (annual payroll of active employees covered by the Plan) was $11,174,528, and the ratio of the UAAL to the covered payroll was 141.7%.
The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of Plan assets is increasing or decreasing over the time
relative to the actuarial accrued liability for benefits.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
44
See independent auditors’ report.
8) OTHER POST-EMPLOYMENT BENEFITS
Plan Description
The District’s defined benefit post-employment healthcare plan, (DPHP), provides medical benefits to eligible retired District
employees and beneficiaries. DPHP is part of the Public Agency portion of the California Employers’ Retiree Benefit Trust
Fund (CERBT), an agent multiple employer plan administered by California Public Employees’ Retirement System
(CalPERS), which acts as a common investment and administrative agent for participating public employers within the State of
California. A menu of benefit provisions as well as other requirements is established by State statute within the Public
Employees’ Retirement Law. DPHP selects optional benefit provisions from the benefit menu by contract with CalPERS and
adopts those benefits through District resolution. CalPERS issues a separate Comprehensive Annual Financial Report. Copies
of the CalPERS’ annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento,
California 95814.
Funding Policy
The contribution requirements of plan members and the District are established and may be amended by the Board of
Directors. DPHP members receiving benefits contribute based on their selected plan options of EPO, HMO or Gold and if
they are located outside the State of California. Contributions by plan members range from $0 to $95 per month for
coverage to age 65, and from $0 to $62 per month, respectively thereafter.
Annual Other Post-Employment Benefits (OPEB) Cost and Net OPEB Obligation/Asset
The District’s annual OPEB cost (expense) is calculated based on the annual required contribution (ARC) of the employer,
an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of
funding that, if paid on an ongoing basis, is projected to cover the normal annual cost. Any unfunded actuarial liability (or
funding excess) is amortized over a period not to exceed thirty years. The current ARC rate is 2.9% of the annual covered
payroll.
The following table shows the components of the District’s annual OPEB cost for the year, the amount actually contributed
to the plan, and changes in the District’s net OPEB obligation/asset:
For 2010, in addition to the ARC, the District contributed an implied subsidy (healthcare premium payments for retirees to
Special District Risk Management Authority (SDRMA) ) in the amount of $597,631, which is included in the $1,033,631 of
contributions shown above. For 2009 this amount was $608,069, which is included in the $1,481,069 of contributions shown
above.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
2010 2009
Annual Required Contribution (ARC) 345,000$ 873,000$
Interest on net OPEB asset (480,878) (437,798)
Adjustment to Annual Required
Contribution (ARC) 591,000 489,999
Annual OPEB cost 455,122 925,201
Contributions made 1,033,631 1,481,069
Increase in net OPEB asset (578,509) (555,868)
Net OPEB asset - beginning of year (6,204,876) (5,649,008)
Net OPEB asset - end of year (6,783,385)$ (6,204,876)$
45
See independent auditors’ report.
8) OTHER POST-EMPLOYMENT BENEFITS - Continued
The District’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB
obligation/asset for the fiscal years 2010, 2009 and 2008 are as follows:
THREE-YEAR TREND INFORMATION FOR CERBT
Fiscal Annual OPEB Percentage of Net OPEB Year Cost (AOC) OPEB Cost Contributed Asset
6/30/10 $ 455,122 100% $ (6,783,385) 6/30/09 $ 925,201 100% $ (6,204,876)
6/30/08 $ 846,000 100% $ (5,649,008)
Funded Status and Funding Progress
The funded status of the plan as of June 30, 2009, the most recent actuarial valuation date is as follows:
Actuarial Accrued Liability (AAL) $ 10,070,000
Actuarial Value of Plan Assets $ 6,273,000 Unfunded Actuarial Accrued Liability (UAAL) $ 3,797,000
Funded Ratio (Actuarial Value of Plan Assets/AAL) 62.29%
Covered Payroll (Active Plan Members) $ 11,878,000 UAAL as a Percentage of Covered Payroll 31.97%
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the
probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality,
and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required
contributions of the employer are subject to continual revision as actual results are compared with past expectations and
new estimates are made about the future. The schedule of funding progress, presented as required supplementary
information following the notes to the financial statements, presents multi-year trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for the
benefits.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
46
See independent auditors’ report.
8) OTHER POST-EMPLOYMENT BENEFITS - Continued
Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the
employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical
pattern of sharing of benefit costs between employer and plan members to that point. The actuarial methods and
assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued
liabilities and the actuarial assets, consistent with the long-term perspective of the calculations.
The following is a summary of the actuarial assumptions and methods:
Valuation Date June 30, 2009
Actuarial Cost Method Entry Age Normal Cost Method
Amortization Method Level Percent of Payroll
Remaining Amortization Period 28 Years as of the Valuation Date
Asset Valuation Method 15 Year Smoothed Market
Actuarial Assumptions:
Investment Rate of Return 7.75% (Net of Administrative Expenses)
Projected Salary Increase 3.25%
Inflation 3.00%
Individual Salary Growth CalPERS 1997-2002 Experience Study
9) WATER CONSERVATION AUTHORITY
In 1999 the District formed the Water Conservation Authority (the “Authority”), a Joint Powers Authority, with other local
entities to construct, maintain and operate a xeriscape demonstration garden in the furtherance of water conservation. The
authority is a non-profit public charity organization and is exempt from income taxes. During the years ended June 30, 2010
and 2009, the District contributed $100,240 and $95,270, respectively, for the development, construction and operation costs
of the xeriscape demonstration garden.
A summary of the Authority’s June 30, 2009 audited financial statement is as follows (latest report available):
Assets $ 2,388,402
Liabilities 52,488
Revenues, Gains and Other Support 719,224
Changes in Net Assets (100,318)
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
47
See independent auditors’ report.
10) COMMITMENTS AND CONTINGENCIES
Construction Commitments
The District had committed to capital projects under construction with an estimated cost to complete of $1,049,789 at June 30, 2010.
Litigation
Certain claims, suits and complaints arising in the ordinary course of operation have been filed or are pending against the
District. In the opinion of the staff and counsel, all such matters are adequately covered by insurance, or if not so covered, are
without merit or are of such kind, or involved such amounts, as would not have significant effect on the financial position or
results of operations of the District if disposed of unfavorably.
Refundable Terminal Storage Fees
The District has entered into an agreement with several developers whereby the developers prepaid the terminal storage fee in
order to provide the District with the funds necessary to build additional storage capacity. The agreement further allows the developers to relinquish all or a portion of such water storage capacity. If the District grants to another property owner the
relinquished storage capacity, the District shall refund to the applicable developer $746 per equivalent dwelling unit (EDU).
There were 17,867 EDUs that were subject to this agreement. At June 30, 2009, 1,750 EDUs had been relinquished and
refunded, 14,662 EDUs had been connected, and 1,455 EDUs have neither been relinquished nor connected. At June 30,
2010, 1,751 EDUs had been relinquished and refunded, 14,663 EDUs had been connected, and 1,453 EDUs have neither been
relinquished nor connected.
Developer Agreements
The District has entered into various developer agreements with developers towards the expansion of District facilities. The developers agree to make certain improvements and after the completion of the projects the District agrees to reimburse such
improvements with a maximum reimbursement amount for each developer. Contractually, the District does not incur a liability
for the work until the work is accepted by the District. As of June 30, 2010, none of the outstanding developer agreements had
been accepted, however it is anticipated that the District will be liable for an amount not to exceed $20,300 at the point of
acceptance. Accordingly, the District did not accrue a liability as of year end.
11) RISK MANAGEMENT
General Liability
The District is exposed to various risks of loss related to torts, theft, damage and destruction of assets, errors and
omissions, and natural disasters. Beginning in July 2003, the District began participation in an insurance pool through the Special District Risk Management Authority (SDRMA). SDRMA is a not-for-profit public agency formed under
California Government Code Sections 6500 et. Seq. SDRMA is governed by a board composed of members from
participating agencies. The mission of SDRMA is to provide renewable, efficiently priced risk financing and risk
management services through a financially sound pool. The District pays an annual premium for commercial insurance
covering general liability, excess liability, property, automobile, public employee dishonesty, and various other claims.
Coverage limits range up to $1 billion. Accordingly, the District retains no risk of loss. Separate financial statements of
SDRMA may be obtained at Special District Risk Management Authority, 1112 “I” Street, Suite 300, Sacramento, CA
95814.
Workers’ Compensation
Through SDRMA, the District is insured up to $200,000,000 for Statutory Workers’ Compensation and $5,000,000 for
Employers’ Liability coverage with no deductible. SDRMA currently has a pool of 348 agencies in the Workers’
Compensation Program.
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
48
See independent auditors’ report.
11) RISK MANAGEMENT - Continued
Health Insurance
Beginning in January 2008, the District began providing health insurance through SDRMA covering all of its employees,
retirees, and other dependents. SDRMA is a self-funded pooled medical program administered in conjunction with the
California State Association of Counties (CSAC).
Adequacy of Protection
During the past three fiscal (claims) years none of the above programs of protection have had settlements or judgments that
exceeded pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage from coverage in the prior year.
12) INTEREST EXPENSE
Interest expense for the years ended June 30, 2010 and 2009, is as follows:
2010 2009
Amount Expensed $ 2,404,530 $ 1,340,110
Amount Capitalized as a Cost of
Construction Projects 510,115 1,353,153
Total Interest $ 2,914,6453 $ 2,693,263
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
49
See independent auditors’ report.
13) SEGMENT INFORMATION
During the June 30, 2010 fiscal year, the District issued Revenue Bonds to finance certain capital improvements. While water and
wastewater services accounted for in a single fund in these financial statements, the investors in the Revenue Bonds rely solely on
the revenues of the water services for repayment.
Summary financial information for the water services is presented for June 30, 2010.
Condensed Statement of Net Assets
June 30, 2010
Water Service
ASSETS
Current Assets $ 126,774,856
Capital Assets $ 455,162,484
Other Assets 8,486,667
Total Assets 590,424,007
LIABILITIES
Current Liabilities 23,980,259
Long-Term Liabilities 118,389,772
Total Liabilities 142,370,031
NET ASSETS
Invested in capital assets, net of related debt 362,311,370
Restricted for debt service 5,192,111
Unrestricted 80,550,495
Total Net Assets $ 448,053,976
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
50
See independent auditors’ report.
13) SEGMENT INFORMATION – Continued
Notes to Financial Statements Years Ended June 30, 2010 and 2009
Water Services
OPERATING REVENUES
Water Sales $ 56,210,109
Connection and Other Fees 1,907,797
Total Operating Revenues 58,117,906
OPERATING EXPENSES
Cost of Water Sales 39,338,495
Administrative and General 17,750,713
Depreciation 12,495,217
Total Operating Expenses 69,584,425
Operating Income (Loss)(11,466,519)
NON-OPERATING REVENUES (EXPENSES)
Investment Income 1,323,844
Taxes and Assessments 3,613,901
Availability Charges 618,806
Gain (loss) on Sale of Capital Assets (143,086)
Miscellaneous Revenues 2,921,016
Donations (100,240)
Interest Expense (2,386,955)
Miscellaneous Expenses (303,963)
Total Non-operating Revenues (Expenses) 5,543,323
Income (Loss) Before Capital Contributions (5,923,196)
Capital Contributions 8,948,920
Changes in Net Assets 3,025,724
Total Net Assets, Beginning 445,028,252
Total Net Assets, Ending $448,053,976
Condensed Statement of Revenues, Expenses and Changes in Net Assets
for the year ended June 30, 2010
51
See independent auditors’ report.
13) SEGMENT INFORMATION – Continued
Notes to Financial Statements
Years Ended June 30, 2010 and 2009
Water Services
Net Cash Provided by Operating Activities $ 4,856,836
Net Cash Provided by Non-capital
and Related Financing Activities 4,747,692
Net Cash Provided by Capital
and Related Financing Activities 25,787,143
Net Cash Used by Investing Activities (26,663,096)
Net Increase in Cash and Cash Equivalents 8,728,575
Cash and Cash Equivalents, Beginning 52,583,868
Cash and Cash Equivalents, Ending 61,312,443$
Condensed Statement of Cash Flows
for the year ended June 30, 2010
52
See independent auditors’ report.
Schedule of Funding Progress for PERS Actuarial Accrued UAAL as a Actuarial Actuarial Liability Unfunded Percentage of Valuation Value of (AAL) Entry AAL Funded Covered Covered Date Assets Age (UAAL) Ratio Payroll Payroll (A) (B) (B - A) (A/B) (C) [(B-A)/C] 6/30/08 Miscellaneous $ 49,712,016 $ 65,542,736 $ 15,830,720 75.8% $ 11,174,528 141.7% 6/30/07 Miscellaneous $ 44,910,326 $ 59,412,116 $ 14,501,790 75.6% $ 10,663,440 136.0% 6/30/06 Miscellaneous $ 40,321,483 $ 54,228,041 54,228,041 $ 13,906,558 13,906,558 74.4% $ 10,470,766 132.8%
Schedule of Funding Progress for DPHP Actuarial Accrued UAAL as a Actuarial Actuarial Liability Unfunded Percentage of
Valuation Value of (AAL) Entry AAL Funded Covered Covered Date Assets Age (UAAL) Ratio Payroll Payroll (A) (B) (B - A) (A/B) (C) [(B-A)/C] 6/30/09 Miscellaneous $ 6,273,000 $ 10,070,000 $ 3,797,000 62.29% $ 11,878,000 31.97%
6/30/08 Miscellaneous $ 5,649,000 $ 11,581,000 $ 5,932,000 48.78% $ 11,307,000 52.50%
6/30/07 Miscellaneous $ 0 $ 11,408,000 $ 11,408,000 0% $ 10,951,000 104.20%
Required Supplementary Information
Years Ended June 30, 2010 and 2009
55
Statistical Schedules
The Statistical Schedule is part of understanding what the information in the financial statements, note
disclosures, and required supplementary information says about the District’s overall financial health.
Contents Page
Financial Trends 5588 These schedules contain trend information to help the reader understand how the
District’s financial performance and well-being have changed over time.
Revenue Capacity 6644 These schedules contain information to help the reader assess the factors affecting the
District’s ability to generate its water, reclaimed, and sewer sales as well as property
and sales taxes.
Debt 7722
These schedules present information to help the reader assess the affordability of the
District’s current levels of outstanding debt and the District’s ability to issue
additional debt in the future.
Demographic and Economic Information 7766
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the District’s financial activities take place
and to help make comparisons over time and with other governments.
Operating Information 7788
These schedules contain information about the District’s operation and resources to
help the reader understand how the District’s financial information relates to the services the District provides and the activities it performs.
Sources
Unless otherwise noted, the information in these schedules is derived from the comprehensive
annual financial reports of the relevant year. The District implemented GASB Statement 34 in 2001; schedules presenting government-wide information include information beginning in
that year.
57
Invested in
Fiscal Capital Assets Total
Year Net of Related Debt Restricted Unrestricted Net Assets
2010 377,855,787$ 5,192,111$ 80,204,428$ 463,252,326$
2009 382,410,491 1,797,512 76,136,868 460,344,871
2008 372,696,591 9,411,114 74,719,712 456,827,417
2007 374,667,591 2,071,307 70,282,627 447,021,525
2006 361,590,845 2,408,473 58,066,009 422,065,327
2005 325,676,089 16,188,364 69,224,020 411,088,473
2004 291,863,666 23,853,441 67,244,139 382,961,246
2003 269,579,907 40,945,837 49,828,535 360,354,279
2002 245,290,752 46,866,439 45,580,508 337,737,699
2001 237,230,807 42,923,480 41,854,311 322,008,598
2001
2002
2003
2004
2005
Source: Otay Water District
Net Assets by Component
Last Ten Fiscal Years
$300,000,000
$320,000,000
$340,000,000
$360,000,000
$380,000,000
$400,000,000
$420,000,000
$440,000,000
$460,000,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal Year
TOTAL NET ASSETS
58
Total
Non-Operating Income (Loss)Change
Fiscal Operating Operating Operating Revenues/Before Capital Capital in Net
Year Revenues Expenses Income (Expenses)Contributions Contributions Assets
2010 60,457,198$ 72,556,693$ (12,099,495)$ 5,937,575$ (6,161,920)$ 9,069,375$ 2,907,455$
2009 57,103,311 71,507,161 (14,403,850)10,932,096 (3,471,754)6,989,208 3,517,454
2008 55,714,845 71,474,372 (15,759,527)10,623,457 (5,136,070)14,941,962 9,805,892
2007 53,250,481 64,651,050 (11,400,569)9,793,692 (1,606,877)26,563,075 24,956,198
2006 47,861,088 59,528,094 (11,667,006)7,242,280 (4,424,726)15,401,580 10,976,854
2005 43,335,915 56,449,475 (13,113,560)6,271,482 (6,842,078)34,969,305 28,127,227
2004 41,539,293 51,516,096 (9,976,803)3,484,492 (6,492,311)29,099,278 22,606,967
2003 36,961,980 46,143,486 (9,181,506)4,517,049 (4,664,457)22,616,580 17,952,123
2002 37,312,385 43,509,038 (6,196,653)6,193,303 (3,350)15,732,451 15,729,101
2001 22,598,438 40,203,049 (17,604,611)10,526,110 (7,078,501)30,209,604 23,131,103
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: Otay Water District
Changes in Net Assets
Last Ten Fiscal Years
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal Year
CHANGES IN NET ASSETS
59
Fiscal Wastewater Connection and Percent
Year Water Sales Revenue Other Fees Total Change
2010 56,249,816$ 2,299,585$ 1,907,797$ 60,457,198$ 5.9%
2009 52,428,648 2,182,429 2,492,234 57,103,311 2.5%
2008 50,808,825 2,386,285 2,519,735 55,714,845 4.6%
2007 48,605,606 2,604,431 2,040,444 53,250,481 11.3%
2006 43,755,610 2,331,094 1,774,384 47,861,088 10.4%
2005 39,348,056 2,018,596 1,969,263 43,335,915 4.3%
2004 39,044,712 1,774,366 720,215 41,539,293 12.4%
2003 34,621,890 1,648,227 691,863 36,961,980 -0.9%
2002 34,980,289 2,031,855 300,241 37,312,385 65.1%
2001 20,645,462 (1)1,578,581 374,395 22,598,437 -31.5%
CHART SOURCE DATA
(1) During the year ended June 30, 2001, the District's Board authorized three separate potable water rebates
totaling $9,700,089. The rebates were accounted for as a reduction of Water Sales.
Source: Otay Water District
Operating Revenues by Source
Last Ten Fiscal Years
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal Year
TOTAL OPERATING REVENUES
60
Administrative Percent
Year Water Sales Wastewater and General Depreciation Total Change
2010 39,338,495$ 2,169,988$ 17,750,713$ 13,297,497$ 72,556,693$ 1.47%
2009 37,252,482 1,890,804 19,888,161 12,475,714 71,507,161 0.05%
2008 35,296,002 2,009,876 21,127,922 13,040,572 71,474,372 10.6%
2007 33,994,841 1,508,672 18,418,441 10,729,096 64,651,050 8.6%
2006 32,043,395 1,899,957 15,477,287 10,107,455 59,528,094 5.5%
2005 30,127,087 2,050,643 13,747,611 10,524,134 56,449,475 9.6%
2004 27,899,376 2,446,603 11,081,599 10,088,518 51,516,096 11.6%
2003 24,477,487 2,548,881 9,310,381 9,806,737 46,143,486 6.1%
2002 23,070,355 2,404,720 8,388,045 9,645,918 43,509,038 8.2%
2001 20,998,534 2,447,034 8,014,245 8,743,236 40,203,049 9.5%
CHART SOURCE DATA
Source: Otay Water District
Operating Expenses by Function
Last Ten Fiscal Years
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal Year
OPERATING EXPENSES
Depreciation Administrative and General Wastewater Cost of Water Sales
61
Fiscal Investment Taxes and Availability Percent
Year Income Assessments Charges Miscellaneous Total Change
2010 1,323,844$ 3,973,328$ 670,784$ 2,777,930$ 8,745,886$ -37.7%
2009 2,252,335 4,586,823 625,065 6,574,850 (2)14,039,073 3.5%
2008 4,538,791 4,591,023 744,722 3,692,206 13,566,742 22.3%
2007 4,416,342 4,151,956 715,664 1,811,619 11,095,581 29.7%
2006 3,188,645 2,779,635 609,099 1,978,632 8,556,011 4.1%
2005 2,052,292 2,326,526 556,590 3,285,128 (1)8,220,536 15.5%
2004 1,097,449 3,071,685 1,132,278 1,816,967 7,118,379 -10.8%
2003 2,578,231 2,600,411 1,069,750 1,731,384 7,979,776 -12.4%
2002 4,466,383 2,381,170 1,052,222 1,207,920 9,107,695 -31.8%
2001 7,606,185 3,054,917 1,116,084 1,568,874 13,346,060 24.7%
(1) The District sold capital assets during Fiscal Year 2005 which resulted in a gain of $2,196,655.
(2) The District received a large, one-time legal settlement as a member of a class action lawsuit in Fiscal Year 2009.
Source: Otay Water District
Non-Operating Revenues by Source
Last Ten Fiscal Years
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
TOTAL NON-OPERATING REVENUES
Total Non-Operating Revenues
62
Fiscal Interest Percent
Year Donations (1)Expense Miscellaneous Total Change
2010 100,240$ 2,404,530$ 303,541$ 2,808,311$ -9.6%
2009 95,270 1,340,110 1,671,597 3,106,977 5.6%
2008 80,541 2,601,252 261,492 2,943,285 126.1%
2007 80,000 950,479 271,410 1,301,889 -0.9%
2006 75,000 959,225 279,506 1,313,731 -32.6%
2005 61,411 1,327,844 559,799 1,949,054 -46.4%
2004 59,220 1,252,307 2,322,360 3,633,887 4.9%
2003 68,756 947,099 2,446,872 3,462,727 18.8%
2002 131,225 1,503,063 1,280,104 2,914,392 3.3%
2001 145,500 1,543,336 1,131,114 2,819,950 -6.8%
(1) Donations are contributions to the Water Conservation Authority formed in 1999. See Note 9 in the Notes
to Financial Statements for more information.
Source: Otay Water District
Non-Operating Expenses by Function
Last Ten Fiscal Years
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal Year
NON-OPERATING EXPENSES
Miscellaneous Interest Expense Donations
63
Fiscal Percent
Year Secured Unsecured Total Change
2010 23,671,616,006$ 527,200,694$ 24,198,816,700$ -9.54%
2009 26,269,630,081 482,465,611 26,752,095,692 3.28%
2008 25,333,821,005 568,975,196 25,902,796,201 14.19%
2007 22,166,251,649 518,441,943 22,684,693,592 15.94%
2006 19,204,029,184 361,636,280 19,565,665,464 19.13%
2005 16,121,465,817 301,937,884 16,423,403,701 16.23%
2004 13,833,852,366 296,691,701 14,130,544,067 16.50%
2003 11,786,410,218 343,253,933 12,129,664,151 15.63%
2002 10,239,985,732 249,933,698 10,489,919,430 16.67%
2001 8,767,643,482 223,676,433 8,991,319,915 9.33%
Source: County of San Diego Auditor and Controller
Assessed Valuation of Taxable Property Within the District
Last Ten Fiscal Years
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
In
T
h
o
u
s
a
n
d
s
Fiscal Year
ASSESSED VALUATION OF PROPERTY
64
Fiscal
Year Purchases Sales Production Purchases Sales
2010 13,580,004 12,749,799 449,771 1,250,873 1,774,563
2009 15,233,498 14,923,843 367,461 1,593,621 1,991,737
2008 16,572,271 15,575,662 538,227 1,566,148 2,001,137
2007 18,255,735 16,059,464 550,206 284,499 (2)1,920,287
2006 17,972,146 14,723,988 537,400 - 1,722,057
2005 16,412,711 13,708,001 501,114 - 1,447,020
2004 18,424,007 14,711,176 568,589 - 1,492,453
2003 16,486,502 13,613,885 486,739 - 1,109,691
2002 17,084,537 13,723,241 471,581 - 1,000,007
2001 14,521,902 12,057,399 418,873 - 674,670
(1) Rates are not presented on this schedule because the District has multiple water rates for various meter sizes and
cannot represent rates in a meaningful manner with a weighted average rate. See Water and Sewer rates on page 69-70
for meter sizes and their corresponding water rates.
(2) The District entered into an agreement with the City of San Diego and began purchasing recycled water from
their South Bay Water Reclamation Plant in 2007.
Source: Otay Water District
Water Purchases, Production, and Sales
Last Ten Fiscal Years
Potable Water (1)Recycled Water (1)
Per 100 Cubic Feet Per 100 Cubic Feet
0
50,000
100,000
150,000
200,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Hu
n
d
r
e
d
C
u
.
F
t
.
Fiscal Year
POTABLE WATER PURCHASES AND
RECYCLED WATER PRODUCTION
Recycled Water Purchases Recycled Water Production Potable Water Purchases
65
Fiscal
Year Potable Recycled Total
2010 288 17 305
2009 113 44 157
2008 224 22 246
2007 563 85 648
2006 788 47 835
2005 1,406 95 1,501
2004 2,125 64 2,189
2003 1,782 123 1,905
2002 2,308 33 2,341
2001 2,667 43 2,710
Source: Otay Water District
Meter Sales by Type
Last Ten Fiscal Years
-
500
1,000
1,500
2,000
2,500
3,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal Year
METER SALES
Recycled Meter Sales Potable Meter Sales
66
Fiscal Year Potable Recycled Sewer Total
2010 47,844 684 4,646 53,174
2009 47,689 671 4,638 52,998
2008 47,591 626 4,627 52,844
2007 47,461 588 4,567 52,616
2006 46,851 558 4,571 51,980
2005 46,042 483 4,570 51,095
2004 44,583 348 4,548 49,479
2003 42,438 312 4,510 47,260
2002 40,732 189 4,342 45,263
2001 38,502 128 4,240 42,870
Source: Otay Water District
Number of Customers by Service Type
Last Ten Fiscal Years
0
20,000
40,000
60,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal Year
NUMBER OF CUSTOMERS
Potable Sewer Recycled
67
LEVIES (1)
Fiscal 1% Property Special Total Total Net Change in Percent
Year Tax Assessments Levies Collections (1)Receivable Collected
2010 3,030,369$ 2,179,270$ 5,209,639$ 5,259,442 (49,803) 101%
2009 3,415,348 2,370,767 5,786,115 5,712,831 73,284 99%
2008 3,202,880 2,627,518 5,830,398 5,754,836 75,563 99%
2007 2,775,882 2,465,497 5,241,379 5,263,367 (21,988) 100%
2006 1,420,049 2,519,927 3,939,976 3,935,983 3,993 100%
2005 1,173,319 2,430,267 3,603,586 3,455,852 147,734 96%
2004 1,844,604 2,442,356 4,286,961 4,108,581 178,380 96%
2003 1,541,362 2,246,865 3,788,227 3,721,776 66,451 98%
2002 1,314,354 2,305,191 3,619,545 3,558,105 61,440 98%
2001 1,134,675 3,171,206 4,305,882 4,176,331 129,551 97%
(1) Levies and collections include Current Secured, Current Unsecured, and Supplemental Homeowners Exemptions.
Source: Otay Water District
Property Tax Levies and Collections
Last Ten Fiscal Years
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal Year
LEVIES AND COLLECTIONS
Levies Collections
68
System Fee (Meter Size)2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Residential
3/4"14.58$ 13.83$ 12.30$ 11.30$ 10.25$ 10.25$ 10.25$ 10.25$ 10.25$ 10.25$
1"18.52 17.56 19.80 18.15 16.50 16.50 16.50 16.50 16.50 16.50
1.5"28.37 26.90 51.95 35.75 32.50 32.50 32.50 32.50 32.50 32.50
Non-Residential & Others
3/4"14.58 13.83 24.00 22.00 20.00 20.00 20.00 20.00 20.00 20.00
1"18.52 17.56 36.95 33.90 30.80 30.80 30.80 30.80 30.80 30.80
1.5"28.37 26.90 51.95 47.50 43.30 43.30 43.30 43.30 43.30 43.30
2"40.18 38.10 64.95 59.60 54.20 54.20 54.20 54.20 54.20 54.20
3"71.68 67.98 104.55 95.90 87.20 87.20 87.20 87.20 87.20 87.20
4"107.13 101.59 119.70 109.80 99.80 99.80 99.80 99.80 99.80 99.80
6"205.59 194.96 239.20 219.45 199.50 199.50 199.50 199.50 199.50 199.50
8"323.73 307.00 - - - - - - - -
10"461.57 437.71 456.60 418.90 380.50 380.50 380.50 380.50 380.50 380.50
CWA and MWD Pass-through charges (Meter Size)
Residential
3/4"9.77 4.33 3.85 3.55 2.85 2.50 2.00 1.00 1.00 1.00
1"16.28 6.91 6.15 5.65 4.55 4.00 3.20 1.60 1.60 1.60
1.5"32.61 13.04 11.60 10.65 8.55 7.50 6.00 3.00 3.00 3.00
Non-Residential & Others
3/4"9.77 4.33 3.85 3.55 2.85 2.50 2.00 1.00 1.00 1.00
1"16.28 6.91 6.15 5.65 4.55 4.00 3.20 1.60 1.60 1.60
1.5"32.61 13.04 11.60 10.65 8.55 7.50 6.00 3.00 3.00 3.00
2"52.15 22.54 20.05 18.45 14.80 13.00 10.40 5.20 5.20 5.20
3"104.30 41.53 36.95 34.05 27.35 19.20 9.60 9.60 9.60 9.60
4"162.98 70.98 63.15 58.20 46.75 41.00 16.40 16.40 16.40 16.40
6"325.92 129.82 115.50 106.45 85.50 75.00 30.00 30.00 30.00 30.00
8"521.51 374.62 - - - - - - - -
10"749.61 538.52 300.30 276.75 222.30 195.00 78.00 78.00 78.00 78.00
Fire Services
All Types 30.11 28.55 25.40 23.30 21.20 21.20 21.20 21.20 21.20 21.20
Sewer Rates 36.88 33.26 32.70 30.90 26.90 23.35 20.95 20.95 20.95 20.95
Source: Otay Water District
Water and Sewer Fixed Rates
Last Ten Fiscal Years
69
Usage Rate (1)2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Tier 1 1.35$ 1.12$ 1.12$ 1.08$ 1.05$ 1.01$ 1.01$ 1.01$ 1.01$ 1.01$
Tier 2 2.10 1.74 1.85 1.78 1.73 1.67 1.67 1.67 1.67 1.67
Tier 3 2.73 2.26 2.01 1.94 1.88 1.81 1.81 1.81 1.81 1.81
Tier 4 4.21 3.48 2.94 2.83 2.75 2.65 2.13 2.13 2.13 2.13
Tier 5 - - - - - - 2.65 2.65 2.65 2.65
Tier 1 2.08 1.72 1.85 1.78 1.73 1.67 1.78 1.78 1.78 1.78
Tier 2 2.70 2.23 2.01 1.94 1.88 1.81 - - - -
Tier 3 4.15 3.43 2.94 2.83 2.75 2.65 - - - -
Publicly-Owned (2)2.06 1.99 1.93 1.86 1.86 1.86 1.86 1.86
Commercial & Others 1.98 1.91 1.85 1.78 1.78 1.78 1.78 1.78
Government Fee (2)0.29 0.29 0.28 - - - - - - -
Tier 1 2.22 1.84
Tier 2 2.27 1.88
Tier 3 2.31 1.91
Tier 1 3.02 2.50
Tier 2 3.08 2.55
Tier 3 3.14 2.60
Recycled (Commercial)1.67 1.65 1.57 1.51 1.51 1.51 1.51 1.51
Recycled (Publicly-Owned) (2)1.75 1.73 1.65 1.59 1.59 1.59 1.59 1.59
Tier 1 2.58 2.13
Tier 2 2.62 2.17
Tier 3 2.67 2.21
Energy Pumping Fee:
Per 100 cubic feet (4)0.038 0.037 0.034 0.032 0.032 0.032 0.032 0.032 0.032 0.032
Sewer Charges:
Residential Customers (5)1.56 1.47 1.41 - - - - - - -
(1) Effective 2009, all non-residential customers are charged based on a tiered rate system in which the water rates are
based on meter size and amount of water units consumed each month.
(2) An additional fee per unit is charged to governmental customers, this is in lieu of tax revenues.
(3) Agricultural customers under the Special Agricultural Water Rate (SAWR) program shall receive a $0.12 discount per
hundred cubic feet (HCF).
(4) Water customers are charged an energy pumping charge based on the quantity of water used and the elevation to which
the water has been lifted to provide service. The energy pumping charge is the rate of $.038 per 100 cubic feet of water
for each 100 feet of lift above the base elevation of 450 feet. All water customers are in one of twenty-nine zones based
on elevation.
(5) For residential sewer customers, effective January 1, 2008, a "Winter Average" fee structure was implemented for
calculating the monthly sewer charge. A usage fee will be charged based on the prior year's "Winter Average" water
consumption, reduced by a 15% usage discount, times a rate of $1.56.
Source: Otay Water District
Water and Sewer Variable Rates
Last Ten Fiscal Years
Residential:
Master Meter:
Public Agency & Commercial:
Landscape, Agricultural & Construction: (3)
Recycled:
70
FISCAL YEAR 2010
Annual % of
Business Type Revenues Water Sales
1. City of Chula Vista Publicly Owned 2,218,584$ 3.9%
2. County of San Diego Publicly Owned 943,132 1.7%
3. State of California Publicly Owned 803,450 1.4%
4. Eastlake III Community Assoc Construction (Potable, Temporary)531,489 0.9%
5. Eastlake Summit Assoc Construction (Potable, Temporary)523,703 0.9%
6. Eastlake Country Club Irrigation (Reclaimed, Permanent)406,813 0.7%
7. Belleme HOA Irrigation (Reclaimed)397,621 0.7%
8. Chula Vista School District Publicly Owned 377,411 0.7%
9. Cuyamaca College Publicly Owned 354,666 0.6%
10. Sweetwater School District Publicly Owned 348,083 0.6%
Total (10 Largest)6,904,952$ 12.3%
Other Customers 49,344,864$ 87.7%
Total Water Sales 56,249,816$ 100.0%
FISCAL YEAR 2004 (1)
Annual % of
Business Type Revenues Water Sales
1. City of Chula Vista Publicly Owned 1,127,011$ 2.9%
2. State of California Publicly Owned 849,140 2.2%
3. County of San Diego Publicly Owned 725,507 1.9%
4. Steele Canyon Irrigation (Potable Permanent)526,582 1.3%
5. Eastlake III Business/Irrigation (Reclaimed)419,942 1.1%
6. Singing Hills Residential/Irrigation (Potable Permanent)390,720 1.0%
7. McMillin Construction (Potable Temporary)377,591 1.0%
8. Eastlake Country Club Irrigation (Reclaimed Permanent)325,036 0.8%
9. California Bank & Trust Irrigation (Reclaimed Permanent)243,689 0.6%
10. Sweetwater School District School/Irrigation (Reclaimed Publicly Owned)224,054 0.6%
Total (10 Largest)5,209,273$ 13.3%
Other Customers 33,835,439$ 86.7%
Total Water Sales 39,044,712$ 100.0%
(1) Because the District did not begin tracking its ten largest customers until Fiscal Year 2004, data for nine years ago is not available.
Accordingly, the current fiscal year and Fiscal Year 2004 are presented.
Source: Otay Water District
Ten Largest Customers
Current Year and Nine Years Ago
Customer Name
Customer Name
71
As a Share
Fiscal Population GO Revenue Capital Per of Personal
Year Estimate Bond COPS Bonds Notes Leases Total Capita Income (1)
2010 206,000 7,283,127$ $61,489,612 $51,255,224 $359,744 - 120,387,707$ 584.41 1.37%
2009 195,000 7,726,575 63,213,693 - 701,516 - 71,641,784 367.39 0.87%
2008 191,500 8,093,302 64,892,774 - 1,031,730 - 74,017,806 386.52 0.85%
2007 190,000 8,445,029 65,851,790 - 1,350,778 - 75,647,597 398.15 0.89%
2006 189,000 8,776,755 24,909,352 - 1,659,037 51,589 35,396,733 187.28 0.44%
2005 186,000 9,093,482 25,653,607 - 1,956,871 100,666 36,804,626 197.87 0.49%
2004 180,000 9,395,209 25,666,312 2,244,633 147,343 37,453,497 208.07 0.54%
2003 176,000 9,681,937 26,298,239 2,522,665 191,742 38,694,583 219.86 0.62%
2002 166,000 9,953,664 26,915,166 2,791,295 - 39,660,125 238.92 0.69%
2001 156,000 10,210,392 27,517,093 3,050,841 - 40,778,326 261.40 0.77%
(1) See the Demographics and Economic Statistics schedule on page 77 for personal income data.
Source: Otay Water District
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
$0
$100
$200
$300
$400
$500
$600
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal Year
OUTSTANDING DEBT PER CAPITA
72
Adjusted Net Revenue (4)
Fiscal Adjusted Operating Available for Debt Service Requirements Coverage
Year Revenue (1)Expense (2)Debt Service Principal Interest Total Factor (3)
2010 65,573,058$ 57,084,904$ 8,488,154 $1,745,000 $2,720,258 $4,465,258 190%
2009 63,739,773 57,076,567 6,663,207 1,700,000 2,342,048 4,042,048 165%
2008 63,732,275 56,420,286 7,311,989 800,000 2,567,884 3,367,884 217%
2007 69,442,301 52,413,282 17,029,019 790,000 1,513,834 2,303,834 739%
2006 58,572,428 47,520,682 11,051,746 745,000 917,790 1,662,790 665%
2005 56,597,040 43,936,109 12,660,931 650,000 869,715 1,519,715 833%
2004 57,195,289 38,980,975 18,214,314 635,000 891,796 1,526,796 1,193%
2003 53,077,164 33,787,868 19,289,296 620,000 908,416 1,528,416 1,262%
2002 51,604,999 31,904,402 19,700,597 605,000 987,467 1,592,467 1,237%
2001 51,547,298 29,012,779 22,534,519 490,000 1,181,032 1,671,032 1,349%
(1) Adjusted revenues exclude sewer revenues and taxes collected for Improvement District 27 and are inclusive
of capacity fees.
(2) Adjusted operating expenses exclude sewer expenses and depreciation expense.
(3) The District's bond covenants require a minimum coverage factor of 120%.
(4) Pledge debts are Certificates of Participation (COPS) and Revenue Bonds.
Source : Otay Water District
Pledged Revenue Coverage
Last Ten Fiscal Years
0%
200%
400%
600%
800%
1000%
1200%
1400%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal Year
PLEDGED REVENUE COVERAGE
73
Net Bonded
Net Debt to Net Bonded
Fiscal Population Assessed Bonded Assessed Debt Per
Year Estimate Valuation Debt Valuation Capita
2010 206,000 24,198,816,700$ $7,283,127 0.03%35.35
2009 195,000 26,752,095,692 7,726,575 0.03%39.62
2008 191,500 25,902,796,201 8,093,302 0.03%42.26
2007 190,000 22,684,693,592 8,449,025 0.04%44.47
2006 189,000 19,565,665,464 8,776,755 0.04%46.44
2005 186,000 16,423,403,701 9,093,482 0.06%48.89
2004 180,000 14,130,544,067 9,395,209 0.07%52.20
2003 176,000 12,129,664,151 9,681,937 0.08%55.01
2002 166,000 10,489,919,430 9,953,664 0.09%59.96
2001 156,000 8,991,319,915 10,210,392 0.11%65.45
Source: Otay Water District
Ratios of General Bonded Debt Outstanding
Last Ten Fiscal Years
0.00%
0.02%
0.04%
0.06%
0.08%
0.10%
0.12%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal Year
BONDED DEBT RATIOS
74
2009-10 Assessed Valuation:24,198,816,700$
Redevelopment Incremental Valuation:274,456,533
Adjusted Assessed Valuation:23,924,360,167$
Total Debt District’s Share of
OVERLAPPING TAX AND ASSESSMENT DEBT:6/30/2010 % Applicable (1)Debt 6/30/2010
Metropolitan Water District 264,220,000$ 1.319%3,485,062$
Otay Municipal Water District Improvement District No. 27 7,780,000 100.000 7,780,000
Grossmont-Cuyamaca Community College District 197,775,562 16.962 33,546,691
Southwestern Community College District 181,958,656 46.477 84,568,925
Grossmont Union High School District 309,143,431 17.509 54,127,923
Sweetwater Union High School District 343,709,415 55.639 191,236,481
Chula Vista City School District 78,430,000 64.158 50,319,119
San Ysidro School District 87,392,104 61.726 53,943,650
Other School Districts 2,296,985,494 Various 39,026,265
City of San Diego 4,340,000 1.200 52,080
Grossmont Healthcare District 85,627,076 15.478 13,253,359
City of Chula Vista Community Facilities District 231,885,000 100.231,885,000
Chula Vista City School District Community Facilities Districts 6,430,000 100.6,430,000
Sweetwater Union High School District Community Facilities Districts 190,875,131 2.523-100 177,111,322
City 1915 Act Bonds 56,408,690 37.539-100 47,358,410
California Statewide Communities Development Authority
San Diego County/ Venture Community Center Assessment District 1,115,001 100.1,115,001
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 995,239,288$
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
San Diego County General Fund Obligations 415,240,000$ 6.871%28,531,140$
San Diego County Pension Obligations 853,514,739 6.871 58,644,998
San Diego Superintendent of Schools Certificates of Participation 21,187,500 6.871 1,455,793
Otay Water District Certificates of Participation 61,890,000 100.000 61,890,000
Grossmont and Southwestern Community College District General Fund Obligations 3,405,000 16.962 & 46.477 1,057,175
Grossmont Union High School District Certificates of Participation 1,342,500 17.509 235,058
Sweetwater Union High School District Certificates of Participation 10,480,000 55.639 5,830,967
Chula Vista City School District Certificates of Participation 143,025,000 64.158 91,761,980
San Ysidro School District Certificates of Participation 37,025,000 61.726 22,854,052
Other School District Certificates of Participation 15,695,000 Various 4,167,914
City of Chula Vista Certificates of Participation 139,700,000 72.721 101,591,237
City of Chula Vista Pension Obligations 4,980,000 72.721 3,621,506
City of San Diego General Fund Obligations 520,825,000 1.200 6,249,900
San Miguel Consolidated Fire Protection District Certificates of Participation 7,020,000 52.728 3,701,506
TOTAL GROSS DIRECT AND OVERLAPPING GENERAL FUND DEBT 391,593,226$
Less: Otay Water District Certificates of Participation (100% self-supporting)61,890,000
TOTAL NET DIRECT AND OVERLAPPING GENERAL FUND DEBT 329,703,226$
GROSS COMBINED TOTAL DEBT (2)1,386,832,514$
NET COMBINED TOTAL DEBT 1,324,942,514$
(1) Percentage of overlapping agency's assessed valuation located within boundaries of the district.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded
capital lease obligations. Qualified Zone Academy Bonds are included based on principal due at maturity
Ratios to 2009-10 Assessed Valuation:
Total Overlapping Tax and Assessment Debt 4.11%
Ratios to Adjusted Assessed Valuation:
Gross Combined Direct Debt ($61,890,000)26.00%
Net Combined Direct Debt 0.00%
Gross Combined Total Debt 5.80%
Net Combined Total Debt 5.54%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/10: $0
Source: California Municipal Statistics, Inc. and Otay Water District
Computation of Direct and Overlapping Bonded Debt
June 30, 2010
75
2010 2001
% of Total % of Total
County County
Employer Employees Rank Employment Employees Rank Employment
Marine Corp Base, Camp Pendleton 60,000 1 4.26%-0.00%
Federal Government 43,500 2 3.09%41,200 1 3.06%
State of California 40,900 3 2.91%37,800 2 2.80%
United States Navy, San Diego 26,000 4 1.85%-0.00%
University of California, San Diego 26,000 5 1.85%21,929 3 1.63%
County of San Diego 20,500 6 1.46%18,600 4 1.38%
City of San Diego 19,500 7 1.39%10,361 7 0.77%
San Diego Unified School District 15,881 8 1.13%13,000 5 0.96%
Sharp Healthcare 14,390 9 1.02%11,184 6 0.83%
Scripps Health 12,700 10 0.90%9,950 8 0.74%
Scripps Mercy Hospital 11,000 -0.78%-0.00%
Total 290,371 20.63%164,024 12.16%
Source: California Labor Market Info, The Daily Transcript, and San Diego Business Journal
Principal Employers
Current Year and Nine Years Ago
76
Personal Per Capita
Income Personal Unemployment
Year Population (in 000'S)Income Rate
2010 (1)3,224,432 137,525,000 42,651 10.50%
2009 3,173,407 134,696,000 42,445 10.20%
2008 3,001,072 143,783,000 45,728 6.00%
2007 2,959,734 131,499,657 44,830 4.60%
2006 2,948,362 126,193,721 42,801 4.20%
2005 2,941,658 118,792,540 40,383 4.50%
2004 2,938,822 113,003,044 38,452 5.10%
2003 2,932,802 104,630,453 35,676 5.70%
2002 2,908,091 100,655,726 34,612 5.30%
2001 2,870,023 97,009,480 33,801 4.30%
(1) Forecast
Source: California Department of Finance; LAEDC-Los Angeles Economic Development Corp.
The Kyser Center for Economic Research Employment Development Department; Labor Market Info
Demographic and Economic Statistics
Last Ten Fiscal Years
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
11.00%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal Year
UNEMPLOYMENT RATE
77
Department 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
General Manager 6 6 6 6 6 6 4 4 3 6
Finance 38 37 36 35 34 34 33 32 32 33
Operations/Maintenance 68 70 71 71 72 71 70 70 71 73
Engineering 21 23 27 31 15 13 33 31 24 27
Administrative Services 20 20 20 19 19 20 21 24 16 19
IT and Strategic Planning 13 13 13 13 12 11 10 10 6 6
Development Services (1)- - - - 17 17 - - - -
Total 166 169 173 175 175 172 171 171 152 164
(1) Development Services was broken out from the Engineering and Planning Department in FY 2005
and then re-combined in FY 2007.
Source : Otay Water District
Number of Employees by Function
Last Ten Fiscal Years
125
130
135
140
145
150
155
160
165
170
175
180
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal Year
TOTAL EMPLOYEES
78
Meter Size 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
3/4" & 5/8"43,815 43,641 43,551 43,544 43,070 42,420 41,069 39,138 37,178 35,014
1"1,815 1,804 1,747 1,618 1,514 1,364 1,220 1,132 1,110 1,079
1-1/2"1,317 1,309 1,275 1,242 1,199 1,147 1,037 918 889 837
2"1,292 1,299 1,283 1,262 1,242 1,199 1,168 1,140 1,124 1,084
3"75 75 76 76 69 67 66 61 57 50
4"184 202 258 275 277 289 329 308 526 496
6"22 21 19 24 27 27 27 27 40 35
Others 8 9 10 7 11 12 15 26 35 35
Total 48,528 48,360 48,219 48,048 47,409 46,525 44,931 42,750 40,959 38,630
% Change 0.3%0.3%0.4%1.3%1.9%3.5%5.1%4.4%6.0%7.0%
Increase 168 141 171 639 884 1,594 2,181 1,791 2,329 2,519
Source : Otay Water District
Active Meters by Size
Last Ten Fiscal Years
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fiscal Year
ACTIVE METERS
79
2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
Water System
Service Area (Square Miles)125.5 125.5 125.5 125.5 125.5 125.5 125.5 125.5 125.5 125.5
Miles of Potable Water Main 709 736 722 680 663 623 609 594 576 554
Number of Operational Storage
Reservoirs in Service 40 38 36 37 37 36 37 37 38 37
Water Storage Capacity
(in Acre-Feet)663.8 655.5 605.5 601.7 601.7 582.4 585.4 582.3 587.5 538.4
Total Water Connections
(No. of Meters in Service)48,074 48,522 48,376 47,615 47,409 46,525 44,931 42,750 40,959 38,630
Number of Pump Stations 23 24 24 24 22 21 21 21 21 20
Number of Potable Water
Valves 19,522 19,192 19,131 18,721 18,042 17,696 16,204 15,830 15,073 14,296
Sewer System
Miles of Sewer Lines 88.0 90.0 88.0 86.2 86.2 85.9 85.4 84.8 83.5 82.9
Number of Treatment Plants 1 1 1 1 1 1 1 1 1 1
Treatment Plant Capacity
(Million Gallons per Day)1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3
Total Flows for Fiscal Year
2010 (in Million Gallons)474 483 503 514 528 506 479 463 455 452
Recycled System
Miles of Recycled Water Mains 96.0 97.0 93.0 83.0 77.6 76.4 70.7 60.6 49.2 40.3
Number of Pumping Facilities 3 3 3 3 2 2 2 2 1 1
Number of Acre-Feet Storage 134.1 133.2 135.0 134.1 97.3 97.3 97.3 97.3 86.9 86.9
Number of Recycled Water
Valves 1,380 1,338 1,314 1,245 1,189 1,155 1,097 948 730 588
Source: Otay Water District
Operating and Capital Indicators
Last Ten Fiscal Years
0
200
400
600
800
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Mi
l
e
s
Fiscal Year
MILES OF POTABLE WATER MAINS
80